Shanghai exchange "blows up" the world market

The Shanghai International Energy Exchange (INE) is becoming increasingly popular among the world's largest oil exchanges and on a par with the New York and London stock exchanges, RISS expert Vyacheslav Kholodkov said. "All Chinese traders and large oil companies have moved to the Shanghai stock exchange. Now it has more than 400 Chinese and foreign participants. They carry out test oil futures transactions in Shanghai, but are planning to start full-scale trade," he pointed out.

RISS expert foretells that the new oil exchange will continue to grow steadily. He explained that his forecast is primarily based on China's crude oil imports data. The volume of China's GDP (second place in the world after the USA) and its growth rates provide an increasing growth in oil demand. Secondly, the US-China trade war and US sanctions against major oil-producing countries are also helping the Shanghai oil exchange to develop. "In an effort to avoid American control, which is carried out through dollar settlement, these countries will move to the Shanghai stock exchange with trading available in yuan," he said.

V.Kholodkov also drew attention to the fact that not only Iran, but also other countries are seeking to shift to yuan-denominated oil trading. He underscored that the position of the Gulf monarchies has an important significance in the "black gold" trading on the Shanghai stock exchange. First of all, it is Saudi Arabia, which is the world's leading oil exporter. "Riyadh's resistance has caused a decrease in China's oil imports from Saudi Arabia. Beijing apparently expects softening of Saudi Arabia's position in connection with the Khashoggi incident. In its turn, the Saudis are planning to become the largest oil supplier to China in 2019 by signing agreements with five major Chinese companies," he explained.

According to expert, Russia and China are strategic partners with similar approaches to problem-solving. Russia has been subject to US sanctions and Chinese goods have been subject to US increased duties. "The main task for both countries now is countering American pressure, in particular, the rejection of the dollar and payments in national currencies. The gradual shift to yuan-denominated oil trading will shake the petrodollar system, as well as the US dominance in the world financial and other markets," the analyst concluded.

trade economics