Petrodollar Hegemony Under Threat as Petroyuan Starts Off on the Right Foot.

In this report I give an update on the new Shanghai oil futures contract traded in yuan at the International Energy Exchange. The yuan oil futures started trading on March 26th, 2018 and activity has picked up significantly as 250k contracts traded last Wednesday, May 16th, 2018. I look at a Zerohedge article about how the new contract is quickly starting to challenge the dollar based WIT crude and Brent crude contracts.

I point out as well that the geopolitical environment will most probably be giving the petroyuan a boost as the U.S. sanctions on Iran could most certainly force Iran to drop the dollar and start selling their oil for the Chinese yuan. The other geopolitical factor that could further accelerate the rise of the petroyuan is the fact that the E.U. could be tilting East as Europe has not dropped the Iran deal and countries like Italy are looking to improve relations with Russia as well.

My conclusion is that the petroyuan has started off the right foot and the speed at which it is establishing itself has surprised me. I note, nevertheless, that challenge to the dollar's reserve currency status and the possible loss of that status does not necessarily mean the collapse of the dollar but means that the U.S. will not be able to push its agenda as easily as it has been used to since the end of World War II.