China’s yuan on the rise in oil trade, but petrodollar here to stay: report

The expansion of China’s digital yuan and financial technology are helping to boost yuan settlements in the crude trade and hastening the decline of the petrodollar, a report from a macroeconomic forecasting firm said – though a changing of the guard remains unlikely.

“The petrodollar’s decline in the Gulf isn’t a question of if, but when – and ‘when’ is coming faster than most realise,” said Diana Choyleva, chief economist at London-based Enodo Economics, citing “rapid changes in the technology of finance” in the report published Wednesday.

“While a petroyuan may gain ground, it is unlikely to fully supplant the petrodollar in the foreseeable future,” said the author, also a senior fellow at the Asia Society Policy Institute’s Center for China Analysis.

These innovations “offer oil producers not only viable but potentially superior alternatives” to dollar-based settlement channels, Choyleva said, which carry a “particular vulnerability to disruption” from technological advances.