Financial safety

De-Dollarization: How Russia and China May Soon Dethrone the Petrodollar

Beijing's launch of yuan-denominated oil futures may facilitate the internationalization of the Chinese currency and deal a heavy blow to the longstanding dominance of the US petrodollar.

On March 26, China kicked off its first-ever yuan-denominated oil futures on the Shanghai International Energy Exchange. Sputnik contributor Igor Naumov writes that Russia is ready to support the Chinese contracts, citing a source close to the top management of Stock Exchange Saint-Petersburg (SPBEX).

"Currently, the US dollar is used as the contract currency in the global hydrocarbon trading system, as well as for other commodities," the journalist explained. "This is what largely provides the dollar with its status of the world's leading reserve currency. [However], the yuan is seeking to dislodge the American [petrodollar] from one of the fastest growing oil markets in the world."

According to Evgeny Itzakov, associate professor at the Department of Management and Entrepreneurship of the Russian Presidential Academy of National Economy and Public Administration (RANEPA), the launch of yuan-denominated crude futures could become a trigger for traders to sell dollars and raise their long positions on the Chinese currency.