Crude oil futures is a natural step for China

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China’s yuan-dominated crude oil futures contract was launched on the Shanghai International Energy Exchange last Monday. However, after a large amount of transactions during the first week, the prices have dropped for three consecutive days.

The Middle East, a main hub for oil providers, is watching China’s new crude futures contract closely. There are some concerns about losing control over pricing while trading slows down.

“Ultimately, to lose control of the pricing of your critical commodity, your, essentially only export, to anybody, it doesn’t matter if it’s China or anybody but particularly, to your biggest customer, it would be an unfortunate development,” said Sean Evers, managing partner of Gulf Intelligence.

However, current affairs commentator, Einar Tangen said China is not trying to do worldwide business in crude. The trade is spreading to every single area, which is why China has it.

“I think it is going to take a couple of years if China hopes to have more say in pricing but not control the price. The Brent Crude and WTI markers have been running for a long time and the trade volume is much larger,” said John Gong, professor from the University of International Business and Economics.

At the same time, John expressed that there are still steps to take before the internationalization of China's currency.