Chinese digital yuan CBDC has been used to trade in an oil transaction for the first time as PetroChina International purchased one million barrels of petroleum using it, as reported by the Shanghai Petroleum and Natural Gas Exchange (SHPGX).
According to the exchange, the transaction was a response to a request by the Shanghai Municipal Party Committee and Municipal Government to implement the Chinese central bank digital currency (CBDC), also known as the e-CNY, to international trade. According to the state-controlled China Daily, it is “another major step forward” for the digital yuan.
Not disclosed were the vendor and the transaction’s price. On October 19, the “OPEC basket” price of oil from thirteen producers was $95.72 per barrel.
The crude oil deal is also a significant step forward for using the yuan on the international market and the global trend away from the dollar. China Daily reported that the use of the yuan in cross-border settlements increased 35% year-over-year during the first three quarters of 2023, reaching $1.39 trillion.
In March, when the French TotalEnergies agreed to transfer liquified natural gas (LNG) to the China National Offshore Oil Corporation (CNOOC), the yuan was first used to purchase LNG on SHPGX. The second LNG transaction denominated in yuan occurred between CNOOC and French Engie last week. The digital yuan was not involved in these transactions.
Also, on Oct. 19, First Abu Dhabi Bank announced that it had signed a digital currency agreement with the Bank of China, the state-owned commercial bank, the day before the conclusion of the third Belt and Road Forum for International Corporation.
China and the United Arab Emirates, of which Abu Dhabi is a member, are mBridge platform participants to facilitate cross-border transactions with CBDC. Next year, MBridge plans to launch a minimum viable product.
In August, Abu Dhabi and India inked an agreement to settle oil transactions in Indian rupees.
