The petroyuan has launched. Let’s investigate its success or lack thereof, primarily the latter.
Economist and book author Daniel Lacalle pretty much sees things the way I do regarding the petroyuan hype. Lacalle compiled some amusing stats in his post on the Petroyuan’s Lacklustre Birth.
Crash at Birth
Every time I read that the yuan is going to dethrone the dollar and that China is going to monopolize the oil market in its local currency, I remember those films and reports of the late 1980s predicting the imminent Japanese supremacy and how it would absorb the West. Today, more than two decades later, Japan continues in secular stagnation.
The biggest mistake made by China in its launch of the yuan oil contract has been to think that a currency with capital controls and an expensive market that trades for barely a few hours a day would be a fantastic incentive for global oil transactions.
The petroyuan is born fatally wounded because it tries to copy the mistakes of the Petrodollar with higher costs and tighter political restrictions.