The USD Overthrown… The Petroyuan instead of the Petrodollar
Many financial experts believe of the threats that are being posed on the dominance of the US currency in the global economy.
The dominance of the US dollar in global trade began with the Bretton Woods system after World War II, which set fixed exchange rates against the US dollar and a fixed price for the US dollar in gold, and even abandoning fixed exchange rates in the seventies didn’t pose a threat to the leadership of the US dollar.
One of the most important and dangerous threat is the birth of a new system in addition to the so called Petrodollar, which is the Petroyuan.
China has recently taken a series of steps that speak of its intention to separate from the global system that guarantees US hegemony.
Chinese President Xi Jinping rallied the BRICS countries by inviting their followers from Asia and Latin America and visited the monarchs of the Arab Gulf States.
The Chinese leader met in Saudi Arabia from December 7 to 9 with six Arab Gulf oil and gas countries, namely Saudi Arabia, Bahrain, the United Arab Emirates, Kuwait, Oman and Qatar.
The Chinese yuan is supposed to be used to boost oil trade.
In this regard, Xi Jinping claimed that China will increase oil imports from Iran in the next three to five years, but will also work on comprehensive energy cooperation with other countries in the region.
It could include investments in petrochemicals, plastics and joint exploration in the South China Sea; Beijing plans to pay all of this in yuan on the Shanghai Oil and Natural Gas Exchange as early as 2025.
Reuters has quoted a well-informed sources as saying that Indian refiners have begun to pay the price of most of the Russian oil they buy through Dubai-based trading companies in Emirati dirhams instead of US dollars.
Although India refuses to recognize the Western sanctions imposed on Moscow, and its purchases of Russian oil may not violate them in any case, banks and financial institutions are careful about settling payments so as not to inadvertently fall under the many measures imposed on Russia because of its war on Ukraine.
Traders and refiners in India fear that they won’t be able to continue settling transactions in US dollars, especially if the price of Russian crude rises above a ceiling imposed by the Group of Seven countries and Australia in December.
This prompted them to search for alternative methods of payment that could also help Russia in its efforts to stop dealing in dollars in its economy in response to Western sanctions.
Previous attempts by Indian refiners to pay trading companies for Russian crude oil in UAE dirhams through Dubai banks failed, forcing them to revert back to the US currency.
However, the sources told Reuters that the State Bank of India, which is India’s largest is now clearing these payments in UAE dirhams, and provided details of previously undisclosed transactions.
The Indian bank, which has branches abroad, including in the United States, didn’t respond to requests for comment.