Since their launch in May, the interest in the renminbi-backed oil contracts has steadily surged. Traded daily volumes hit a record 250,000 lots last Wednesday, and the share of yuan contracts in global trading jumped to 12 percent compared to eight percent in March.
“The contract is thundering into action,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore, as quoted by Reuters. “It makes sense for Iran to begin selling oil under contracts denominated in yuan rather than dollars.”
China is the largest oil consumer in the world and also buys the most from Iran, a major OPEC producer. Beijing buys 25 percent of Iranian oil exports, which accounts for eight percent of its needs.
“The sanctions… can potentially accelerate this process of establishing a 3rd (oil) benchmark,” said senior vice president for derivatives in Singapore at financial services firm INTL FCStone, Barry White.