China, the largest importer of oil in the world, has launched this week its first yuan-denominated oil futures on the Shanghai International energy exchange. Observers note that oil futures may be the new benchmark, providing Beijing with additional pricing and promoting the internationalization of the RMB.
Sputnik discussed the significance of the new futures of China with bill halter, USA, precious metals, a broker and analyst.
Sputnik: in your opinion, how significant are these contracts launched by China? The impact they have on the oil market?
Bill halter: China watch is very important because now they are the biggest importer in the world, and what is settled in yuan is not settled in dollars, so it will create less demand for dollars.
Sputnik: do you think that this will happen in the near future? Some said that we need to see what happens with the Saudis, who, on the one hand, there is a huge attachment and dependence on weapons and trade with the United States, but they also have a great interest in China, so how do you imagine it?
Bill halter: he can go slow until it clicks like a light switch, you are right, the Saudis pattern. If they were to announce that they will supply oil to China for the yuan, somebody turned on the light, and I wanted to tell you that it was in the works for quite a long time, and there was a deal between China and Russia on oil exports from Russia by using local currencies, rubles and yuan, so that the exit from the dollar has already begun, the beginning the agreement was just the official stamp because the oil is already settling in-dollars at the time.
Sputnik: what China has going for it from the point of view of its ability to affect the Saudis?
Bill halter: it is obvious to say that China is going to participate in Saudi Aramcob that shows You right there that the Saudis are beginning to succumb to the Chinese, so it’s not a matter of if, it’s a matter of time.
Companion: what do you think about the possibility for foreigners to buy these variants?
Bill halter: I think that foreigners are going to look at that as perhaps a more pure market, because there is unconfirmed information, there is evidence of guilt, etc. in many of the Western markets for the rigging, many markets are rigged, there are all kinds of manipulation and I think the aliens would: and look at this, because it’s not using the dollar, And B. they can look at it as more pure and the free market.
Sputnik: the Chinese like to take a risk; the assumption is much more important and plays a big role in the Chinese market, and some people said that the Chinese merchants, when they got a hold of Nickel in these markets, they didn’t even know that they traded, they were just buying the steel reinforcing bars, iron ore, and the prices have gone a little crazy. Within six weeks, they surpassed the benchmark futures on LME (London metal Exchange)…
Bill halter: I don’t think it is the oil story, I think it’s a Currency story, it’s a big story here, every step forward for China is a step backwards for the United States, and another way to say this is the yuan going forward, devoured, as the dollar goes in the opposite direction, so I don’t think it’s oil story from the point of view of the oil market or oil volatility, I really think it’s monetary history.
Companion: so you think this will affect the price of the yuan going forward and the price of the dollar?
Bill halter: I think it obviously affects the price of the dollar, the dollar has been supported by literally the energy complex around the world and this is obviously going to create less demand for the dollar, which should create a lower price, lower cost, and this will create demand for the yuan, simply because the countries who want to settle in yuan will have to sell their currency and buy yuan, so I think it will contribute to the strengthening of the yuan.
Companion: on the other side of the coin, a stronger yuan will lead to rising prices, and China is still a very major exporter, and the United States, which wants to become more of an exporter, will decline in dollar prices, making their goods more attractive to foreigners. It will be an interesting development, I think, in any case, certainly something to look out for…
Bill halter: just one last thing, I think, tariffs, trade wars, it seems, is the beginning, I don’t think it’s a coincidence that this is happening now, I think this is due to the oil payments in yuan is a threat to the United States.
Sourse: sputniknews.com
