Since Monday, China has started trading its own futures on crude oil. Future contracts are expected to be traded on the Shanghai International Energy Exchange, with the final price on March 26 being 416 yuan or approximately $68 a barrel.
With these actions, the country, which is the largest oil buyer in the world, is trying to gain more control over pricing, challenging European and American benchmarks (Brent and WTI). On the other hand, contracts will not only give more control over pricing, but also stimulate trade in yuan.
According to data from the Shanghai International Energy Exchange last week, 19 foreign realtors have registered for trading on new oil contracts.
Regulators in the country hope that futures will serve as a means to hedge the risk of its oil companies, a reference price for industry participants and a means to help open the country's financial markets.
Source: Bloomberg Pro Terminal
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