More significantly, the petro-yuan will enable oil exporters such as Russia, Venezuela and Iran to bypass US sanctions by trading yuan for gold. Earlier attempts to peg oil to the yuan had flubbed as China lacked sufficient diversification in its domestic petroleum infrastructure. China and Russia are coincidentally among the top three gold producers in the world while China competes with India in terms of annual gold consumption. Saudi Arabia, the lynchpin of the global petrodollar regime, saw Chinese imports slashed from 25% in 2008 to 15% last year. China may sweeten Riyadh’s currency switch by buying a 5% stake in state-owned Saudi Aramco through an initial public offering next year.

Source: The Edge Markets September 28, 2017 03:33 UTC