Russian oil producers to make money from China’s yuan-backed crude futures – analysts

Latest news

    Crude oil exports implemented via Eastern Siberia–Pacific Ocean (ESPO) oil pipeline may substantially benefit from yuan-denominated oil futures launched by China last month, according to industry experts.

    If the new product manages to succeed, price pegging of the Russian ESPO export blend to the China contract will favorably influence the Russian oil blend price. The new futures contract may reportedly boost Russian producers’ annual revenues by extra $440 million.

    Read more

    Russia & China gradually ditching US dollar in favor of domestic currencies as trade booms

    Last year, China topped the US as the biggest oil importer with nearly a million barrels of crude being purchased every day. Chinese oil demand could increase by 2.1 million barrels per day by 2023, according to Wood Mackenzie consulting firm, as quoted by TASS. The analysts stress that Chinese authorities are clearly seeking to exert more influence on oil pricing in this regard.

    “Certainly, it is more beneficial for China to make settlements in the national currency. The national futures launch is a step in this direction. This instrument will make possible to form contracts on its basis and perform hedging,” Darya Kozlova from Vygon Consulting told the agency.

    “At current import volumes, the contract grades could account for trade of about 200 billion yuan ($31.9 billion). This will help the Chinese government in its efforts to internationalize renminbi,” said Wood Mackenzie’s research director Sushant Gupta.

    The new product encourages foreign investment in Chinese assets. China’s Finance Ministry even pledged to exempt nonresidents investing into the contract from taxes for up to three years.

    “However, if the government continues market interventions, while control measures over capital flow will be tightened, this will only discourage investors,” notes Ekaterina Grushevenko, an expert from the Skolkovo Business School.

    Analysts say that Beijing is on its way to creating its own oil benchmark as seven different blends accounting for just 20 percent of total imported volumes are currently authorized for trading.

    “Creation of liquid futures is a lengthy and complex yet feasible process, as Dubai’s experience shows. A fairly liquid exchange market is an advantage for China, which is important for benchmark forming” said Kozlova.

    View the original article: https://www.rt.com/business/424192-russian-producers-benefit-china-futures/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

    For more stories on economy & finance visit RT’s business section

    In the same category are

    Trump blasts Kavanaugh accuser, says if alleged attack was that ‘bad,’ charges would have been filed President Trump attacked the woman accusing Supreme Court nominee Brett Kavanaugh of sexual assault in a tweet wondering if the alleged ‘attack’ was s...
    Fitch slashes global economic growth forecast over US-China trade war International rating agency Fitch has downgraded its 2019 global GDP forecast. The worsening trade conflict between Washington and Beijing is behind t...
    Ukraine brags its airborne troops captured US HQ during exercise in Germany A Ukrainian airborne troops company have blindsided NATO troops during a joint military exercise, capturing an American HQ and a team of Italian comma...
    Russia could gain from trade wars by cornering new markets – economy minister Trade wars between the United States and China could benefit Russia, according to the Russian Economic Development Minister Maksim Oreshkin. With tari...
    Try this on for size: Spain mulls charging shoppers for fitting clothes in-store The government of a Spanish region is proposing that customers be charged to use changing rooms to try on clothes in an unorthodox bid to tackle onlin...
    UK boasts of securing its skies from ‘aggression’… by peeking at Russian bombers in int’l airspace The Royal Air Force has fearlessly thwarted yet another act of ‘Russian aggression’ in the British domain, by escorting a couple of Tu-160 bombers fly...

    Leave a comment

    Your email address will not be published. Required fields are marked *

    This site uses Akismet to reduce spam. Learn how your comment data is processed.