China's Top Crude Exporter: Russia Reaps the Rewards of Bypassing the Dollar
The end of dollar dominance is not an abstraction for Russia and China. It's already happening
In January it was revealed that for the first time ever Russia overtook Saudi Arabia in 2016 to become China's biggest crude oil supplier.
According to OilPrice.com, "Russia is now China’s No.1 crude supplier, a status which it is very likely to retain in the following years, having demonstrated a spectacular 24 percent year-on-year increase in 2016. Almost all supply routes to China experienced growth in 2016."
Some media reports attribute Russia's ascendance in China's crude market to increased demand from independent Chinese "teapot" refineries—but this explanation conveniently ignores the elephant in the room: Beijing is turning its back on the dollar, and unlike the Saudis, Russia is more than happy to do business in yuan.
As Paul Goncharoff pointed out just last week, "an International Energy Agency report showed that at the end of 2015 Russia overtook Saudi Arabia as the biggest crude exporter to China. The trade is Ruble/Yuan oriented, not US Dollar. Russian exports to China have more than doubled over the past seven years, rising to over 550,000 bpd and are expected to continue to be strong especially via the Eastern Siberia-Pacific Ocean (ESPO) pipeline."
It didn't happen overnight. Even the mainstream business press understood what was coming.
As Bloomberg reported back in June, 2015:
“Following Russia’s recent acceptance of the renminbi as payments for oil, we expect more record high oil imports ahead to China,” Gordon Kwan, the Hong Kong-based head of regional oil and gas research at Nomura Holdings Inc., said in an e-mail, referring to the Chinese currency. “If Saudi Arabia wants to recapture its number one ranking, it needs to accept the renminbi for oil payments instead of just the dollar.”
The end of dollar dominance isn't an Edgar Allen Poe opium dream. It's already happening.
Not at all.
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