Dollar gradually loses market share in oil trading

Currently, no global crude oil exporter trades in U.S. dollars. Finance & Banking In oil trading, US dollar is gradually losing its market share Tram Anh • {Publication date} Currently, global crude oil exporters are trading without using US dollars.

The Wall Street Journal this week quoted Natasha Kaneva, head of global commodities strategy at JPMorgan Chase, as saying that global crude oil consumers and exporters are conducting transactions that do not require the use of U.S. dollars to sign contracts and commercial agreements.

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The news comes a day after Iran and Russia, the world’s two major oil exporters, said they had finalized a deal to conduct trade in local currencies rather than dollars. Additionally, Iran and Russia, two sanctioned countries, have found buyers for their goods in China and India, selling them at steep discounts.

Ms. Kaneva told a reporter from the Wall Street Journal: “The U.S. dollar faces some competition in the commodity market.” She emphasized that the proportion of world oil traded in other currencies has increased by nearly 20%.

The trend is less pronounced for other commodity exporters. However, some of these countries, including Brazil, the United Arab Emirates and Saudi Arabia, have taken some steps to prepare for “Beyond the Dollar” trading.

Data compiled by JPMorgan showed that 12 commodity contracts were executed in non-dollar currencies in 2023, compared with seven contracts in 2022 and just two contracts recorded between 2015 and 2021.

This year, most contracts signed with Russian sellers did not use U.S. dollars, except for one case in the United Arab Emirates.

Earlier this year, India and the United Arab Emirates signed a local currency trading agreement, and an Indian refinery purchased the first batch of UAE crude oil in rupees. Brazil and China also traded Brazilian pulp goods in their national currencies for the first time.

In November, China and Saudi Arabia signed a 50 billion yuan ($7 billion) local currency swap agreement to strengthen financial ties between the two countries and expand the use of their local currencies.

The U.S. dollar’s ​​share of all foreign exchange market transactions is said to hover around 88%, giving the U.S. dollar its widespread dominance in global trade and finance.

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