Russia’s success in expanding oil exports to China is likely to widen the use of Renminbi settlement

Renminbi is likely to be a winner of the competition in Asia between crude oil exporters. Most of the major oil exporters are expected to switch to Renminbi settlement for sales into China, so as not to concede any competitiv  advantage to Russia. Also, they are expected to offer it elsewhere in Asia. 

Russia's push to de-dollarise its trade with China has been mounting over the past 18 months.

In the latest example, Gazprom announced earlier this month that that all of its yearto-date exports to China via the East Siberia Pacific Ocean pipeline had been settled in Renminbi. Some Middle East producers, including Abu Dhabi, have already moved towards Renminbi settlement over the past two years. 

China's May trade data is expected to incentivise other major exporters to expand their use of Renminbi settlement. Russia overtook Saudi Arabia in May to become the largest exporter of crude oil to China. 

Given that Renminbi settlement is seen as an advantage for Russian crude, other producers are expected to try to match it. Further, once the facility is available to China, it is expected to be offered more widely across Asia.