Many thanks to all, especially eegbvi, for informative answers. Question is now will China boom and should we be investing in Chinese stocks or through a fund?!! Or is it best just to watch for the moment? In the meantime, fingers crossed that Humpback comes in and gives FOGL a boost. Where do we after Humpy?
I should qualify that as eegbvi points out there are contracts priced in yuan already,. My knowledge of the oil market is not encyclopaedic but I imagine contracts exist priced in all sorts of other currencies as well.
But the majority still trade in $$$s, or make some reference to it. And the benchmarks are still set in the spot and forward markets in $s, that's where the liquidity is and where the hedgies and traders operate.
As eegbvi again points out, the Saudis have influence in how they choose to price their oil, but I don't see them wanting to upset Uncle Sam too much. Thy live in a dangerous neighbourhood, and I don't see China stepping in there to defend any oilfields.
You never know, and things can change quickly, but it's not one of the significant risks for a Falklands oilie, imho. Worry first about drilling, funding, and the Argies potential for some sort of buggeration factor.
It started last week with Gazprom & Rosneft already issuing oil and gas contracts in Yuan and Euros. If OPEC follows suit after the IMF Meeting in Oct the dollar will be in deep trouble probably a slow but constant decline as up to $6 trillion is unwound. As China holds a lot of US Treasuries this will take a little time since China would hurt itself in premature dumping of US Treasuries which are used to pay for OPEC oil. I assume the Chinese will slowly run their holdings down against oil imports, but then replace the dollars with some Euros and the rest in Yuan. The new Chinese International bank will start functioning in September which is why UK, EU, Russia, Canada plus Australia and several Asian countries have already agreed Yuan swaps despite US objections. Qatar also recently joined so now the Chinese at least have a foothold in OPEC. US is still trying over the summer to persuade Saudi and the other Gulf States to stick with the dollar but with Obama cozying up to Iran it will be more difficult. Indeed Saudi is now talking to Israel which was previously unthinkable with the plan to tackle Iran. As to the dollar, should the worst happen the US will be forced to really hike interest rates to entice dollar holders to retain dollars. Perhaps over months to 5% or 6% pa. The danger then is that UK and EU follow suit in order to bring some order into the exchange rate, probably from early 2016. Should that happen in UK the FTSE will lose 100 - 150 points and the DOW/NASDAQ lose 15%. The UK housing market will take a hit most likely with s lot of the buy to let properties being unsustainable. Let's hope it doesn't happen. As to 88E it will produce for the US domestic market probably with payment in dollars so its merely its AU$ financial reporting that takes a hit maybe. But if it exports it can choose a Yuan or Euro contract should it wish as this would mitigate any exchange losses. Hope that helps
Ta much Ghenghis15, All thoughts welcome. As I say, I've noticed differing opinion on various sites and it's always good to hear from someone with a finance background. Dunno about you, but although I'm in this for the long haul, it would be good to hear Humpback is a success and we might at last see some sort of spike here, even if it's only to encourage the troops! Roll on Aug/Sept and some possible good news, although I'm not allowing myself to think it's a game changer. Would a big oil firm be interested either in buying what we already have or even take us over?
Iman, I won't claim to be an expert, but I did spend a working lifetime in finance, tho not oil or currency related. But I did have to take an interest in such things, and in my experience these changes take decades.
I don't see too many central banks, or even hedgies, rushing to stash away the yuan even if it becomes freely traded. 30 years ago the talk was of the DM or yen replacing the $, still not happened.
You never know what the future brings but if oil starts being priced in yuan rather than dollars in the next 20 years I'll be amazed.
Hi folks...another daft laddie question from north of the border which I hope you oil guys might be able to answer and I turn to eegbvl in particular. I've been doing some research into the possibility of the yuan becoming a reserve currency if the IMF decide so in October. What would happen to oil stocks such as FOGL if it became a major player and oil is traded in the yuan? I know the dollar would suffer and could lead to billions being dumped if OPEC agrees. However, I am finding conflicting theories from 'ex perts' and I wondered if it would also affect 88e, where I have shoved a few bob. All thoughts greatly appreciated, as always!
They have done what they said they would do .we are just waitng for details.If the next drill comes in They will start getting the cheque books out we would have been happy with one stike a fews years back. Its only a matter of time.They have a good idea whats out there. Good luck every one.
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