Experts: Chinese Petro-Yuan to Threaten US Petrodollar Dominance

Financial experts are predicting China's Petro-Yuan may soon threaten the U.S. dollar's dominance in the crude oil market.

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“The question number one is whether China will be able to make the oil market its demand market, and not the oil supply market traded in dollars, which it is now,” Vladimir Rozhankovsky, an analyst at Global FX Investment analyst, told RT

He added: “The question number two is trade wars. If the world trade enters into a death spiral of reciprocal economic sanctions, keeping oil trade in dollars will be a matter of strategic importance or a matter of survival for the US.”

China has recently overtaken the United States as the world's number one oil buyer, according to market data.

However, Chinese stock is susceptible to attacks by the United States, in effect, undermining the potential of the Petro-Yuan, as well as devaluating the Yuan's base value. Rozhankovsky stressed that if the United States embarks on this path, it will make Chinese oil futures less attractive.

“The trade war between the U.S. and China has already begun. China has plans to promote the renminbi as a reserve currency, and there is no better move than to purchase raw materials in its national currency. It can save money on the currency conversion and become less dependent on the US dollar,” said Stanislav Werner, head of the analytical department of Dominion.

Last year, the Chinese government announced plans to start crude oil futures contracts, enabling China to buy oil with gold or to convert yuan into gold without needing to turn it into U.S. dollars.

Last month, the Asian country, which is the second largest economy in the world and largest oil importer, launched its yuan-denominated crude oil futures contract, also known as the Petro-Yuan, on the Shanghai International Energy Exchange (INE) after the State Council approved the mechanism.