After the West imposed economic sanctions against Moscow, Russia and Beijing established a powerful energy alliance which changed the global oil market. In addition to increasing trade operations with oil and gas, the two countries are set to challenge dominance of the US dollar in setting prices for crude.
Petro-yuan is a strategic payment tool which would facilitate switching to a multipolar monetary systematic which would include various currencies and reflect the global balance of power, Mexican economist Ariel Noyola Rodriguez wrote in an article for the foreign affairs analysis website Voltaire Network.
“Instead of humiliating Russia, the economic war started by Washington and Brussels have had an opposite effect. It has contributed to strengthen energy ties between Moscow and Beijing,” he wrote.
Currently, the two countries are coordinating an ambitious plan of several strategic projects , including oil and gas pipelines and joint refining facilities.
This cooperation has made serious changes to the global energy market, having started a pivot of energy producers and exporters to the Asian market.
In 2015, Russia surpassed Saudi Arabia in oil supplies to the Chinese market.
What is more, the significance of European countries in the global crude market has decreased, in comparison with Asia. In 2015, China toppled Germany as the third-largest buyer of Russian oil.
But, this strategic energy alliance has one long-term goal. Moscow and Beijing turned oil supplies into the channel to switch to a multipolar monetary system. Western sanctions are pushing Russia to exclude dollar and euro transactions from their trade operations, for safety.
As a result, China has been paying for Russian oil and gas in yuan since mid-2015. This fact has been confirmed by Gazprom Neft, the oil-producing subsidiary of Gazprom.
This move has helped increase the popularity of the Chinese currency in the global market. At the same time, Russia has used the strategy to neutralize the effect of sanctions.
“This creates basis for a new financial order backed by petro-yuan. The Chinese currency would soon turn into the main currency for trade operations in the Asian-Pacific Region,” the author wrote.
According to him, other oil-producing countries, including OPEC members, would also switch to yuan payments for oil.
“Many geo-economic powers understand that in order to build a stable monetary system de-dollarization is needed,” Rodriguez assumed.