Energy & Environment

China Launches Its Own Oil Trading Exchange

China became the world’s largest oil importer last year

A pump jack is seen in Xinjiang Province, China.

In energy markets, oil trades are based on prices mostly in U.S. dollars. Now, there’s a new price marker in Chinese currency with that country’s launch of its own crude oil exchange.

Markets have sometimes had a hard time predicting Chinese energy demand, according to University of Houston energy fellow Ed Hirs.

“In 2008, China began to import two million barrels a day that no one saw coming, as they shut down their coal plants to clean up the atmosphere in preparation for the Beijing Olympics,” Hirs said. Now, he said, companies will have a clearer picture of how much oil China has and how much it needs.

That’s timely, as China became the world’s largest oil importer last year. Still, analysts say it could take years for the Shanghai exchange to significantly influence oil prices. Hirs noted the move makes China less dependent on the U.S. dollar, something China likely appreciates even more given the recent fears of a trade war.

Share