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Dethroning the Petrodollar

Dethroning the Petrodollar

The Oilman
January 18th, 2023

Dethroning the Petrodollar

Good morning, this is the Oil Patch. The daily oil and gas newsletter that perfectly complements your 3rd, 4th, 5th every cup of coffee today.

Here's what the Oilman has for you today:

The PetroDollar PetroYuan
️Kazakhstani Oil to Germany via Russia 🤔
China Back in Business
Greta Goes to Jail
Meme of the Day

The PetroYuan: China's Bid to Dethrone the PetroDollar

China is looking to outmaneuver the West in the global economy by invoicing oil and gas in renminbi (RMB).

And Saudi Arabia is open to the idea of settling oil trade in currencies other than the greenback.

Credit Suisse contributor Zoltan Pozsar discussed how the world is now shifting to a multipolar order led by the BRICS countries (Brazil, Russia, India, China, and South Africa) and potentially including Saudi Arabia, Turkey, and Egypt.

Pozsar focused on Chinese President Xi Jinping's speech which outlined China's plans to outmaneuver the West in the global economy by strengthening energy cooperation with the Gulf Cooperation Council countries and invoicing oil and gas in RMB.

China is leading this charge to dethrone the Petrodollar with a new partnership to expand crude oil trade and promote the use of the yuan in energy deals, and has positioned the Shanghai Petroleum and Natural Gas Exchange to be used to carry out these trade settlements in yuan.

The Oilman knows the Saudi riyal has been pegged to the U.S. dollar for decades.

It's not going to be an easy feat to dethrone the dollar as the king of global oil trade.

But The Oilman still don't feel too good about China actively working to do so.

Oil to Germany from Kazakhstan Via Russia

Kazakhstan has secured approval from Russia to transport 300,000 tons of oil to Germany in the first quarter of 2021.

The Oilman can't possibly imagine what could go wrong with that arrangement.

Kazakhstan plans to export 1.5 million tons to Germany via Russia in 2023, with the potential to increase to 7 million tons.

Kazakhstan is exploring export routes that avoid Russia altogether, such as the Middle Corridor, which involves tankers crossing the Caspian Sea.

The amount of oil Kazakhstan is supplying falls far short of the 20 million tons per year that Russia used to sell to Germany.

China's Back in Business

According to Vice Premier Liu He, the Asian nation is officially past its peak in covid infections and ready to return to its pre-pandemic growth trend this year.

But don't just take his word for it, OPEC agrees and is forecasting China's economic growth at 3.1% for last year and 4.8% for 2023. Sure, there's still some uncertainty surrounding the global economy, Covid-19 containment policies, and geopolitical tensions, but China's economy is looking pretty solid.

Now let's talk about oil, because we all know that's where the real money is.

China's crude oil imports are on the path of recovery with 11.4 million bpd in November, and preliminary data shows that imports remained at "similarly high levels."

The oil industry is closely watching China's economic data to get a handle on global crude oil demand growth, and with China's recent shift away from its zero-Covid strategy, analysts are revamping their estimates for China's economic data and its thirst for oil.

This news makes the Oilman bullish oil.

Today's Edition is Brought to You By Wicked Energy

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Greta "Arrested" for "Protesting"

According to the MSM, activist wunderkind Greta Thunberg was apprehended during a demonstration against the razing of a quaint hamlet for the sake of a coal mine's expansion.

Also according to MSM, the picturesque German village was unfortunately sacrificed to make room for the mine's growth.

But you and the Oilman know better:

You know the Oilman's mama used to say:

"Fool me once, shame on you; fool me twice, shame on me."

Shame on us, folks. Shame on us.