MOSCOW (Sputnik) — A yuan-denominated crude contract could challenge the market currently dominated by dollar commodity pricing, the Market Watch agency reported, citing traders and analysts.
It also noted that the Shanghai Stock Exchange had already conducted five test runs of the new contract.
Analysts say it could take time before China's new oil futures challenge the oil trading dominance of the two current global benchmarks, London-listed Brent crude futures and New York-listed West Texas Intermediate (WTI) futures, the main US benchmark.
"The Chinese have been talking about it forever but they seem very serious this time. It definitely has a lot of potential," Doug King, chief investment officer of Singapore-based hedge fund Merchant Commodity, said, as quoted by the agency.
According to Societe Generale, non-dollar oil trade covers just 300,000-350,000 barrels of more than 82-million-barrel daily global crude market turnover.
China is the world's second largest oil consumer after the United States, and it imports almost 20 percent of global oil trade. In April, media reported that Beijing had hoped to begin trading oil futures on the Shanghai International Energy Exchange (INE) in the second half of the year. The introduction of the yuan-denominated contract is also part of Beijing's wider strategy to make the yuan a major international currency.