De-dollarization of oil and gas trade

Abstract

This article provides a review of recent unfolding geopolitical situation on the world stage. China and Russia have taken huge steps to create alternatives to USD dominated trade and finance. Not too long ago surplus trade countries such as China, Russia and the rest had no choice but to buy U.S. Treasury securities with their surplus USD enabling U.S. currency printing and war waging. China and Russia have accumulated massive amounts of physical gold, amid increased economic sanctions and trade war with U.S. Jointly with BRICS and Eurasian partners of Shanghai Cooperation Organization they have been conducting bilateral trade outside of USD and were working on new monetary alternative to the dollar world. China's economic diplomacy of the New Silk Road, backed by PBOC, AIIB and Silk Road Fund, and Russia's Eurasian Economic Union group are working together on developing a new market and infrastructure including a separate money transfer system CIPS, SPFS, PVP away from USD based Swift to eliminate vulnerability thru U.S. sanctions; demanding international financial reforms, ending domination of limited number of reserve currencies which doesn’t regard growing emerging economies and reshuffling of BRICS IMF voting quotas according to size of their economies. Soon to be enacted, oil futures contracts traded in China in yuan with gold backing, thru yuan for gold futures could shift OPEC members from ME to prefer gold backed yuan for their oil over USD. De-dollarization spiked as Venezuela stopped accepting USD for oil payments instead opting for oil pricing in yuan. Geopolitical power balance could shift from West to East due to oil futures contracts convertible into gold, which would put oil trade back on gold price and endanger petrodollar. This article tries to highlight the importance of oil and gas trade in international relations and monetary policy shaping.