On April 10, Bloomberg Interfax just posted a shocking update on its business wire that announced Russian oil giant Gazprom is now considering the issuance of a Yuan bond. While initially symbolic in scope, this new oil trade vehicle is a prelude to the future of global oil transactions, and a glimpse of a world not tied to the petro-dollar system.
This announcement of a Yuan based oil trade bond also appears to be a mechanism tied to a new trade agreement being forged between Russia and China that is expected to be signed in May when both nations come together to complete negotiations on oil and natural gas purchases. The agreement is being called the 'Holy Grail' of energy deals by Russia's largest oil company Rosneft, and will be accomplished using the Chinese Yuan, thus bypassing the dollar mandated petro-dollar system.
Recent confrontations between Russia and the U.S. in both Syria and Ukraine have been done primarily to achieve supremacy in the newly emerging global monetary system, and to determine how much longer the petro-dollar remains the world's reserve currency. China already holds key trade partnerships outside the dollar through the Asean agreement signed in 2012, and Russia is currently building its own coalition known as the Eurasian Trade Zone. In both instances, energy, commodities, products, and services will be transacted outside the dollar, and in any currency willing members desire, with Europe remaining the great prize both East and West are vying to court.
Besides the nationalized energy companies of Gazprom and Rosneft, Russia's central bank has made its own symbolic announcement of the future when it changed its corporate logo to a gold backed ruble. Behind the scenes, most analysts realize that both Russia and China are seeking to pull the reserve currency back to a gold standard after 43 years of a purely fiat status, and it is the East, not the West, who has been accumulating record amounts of physical gold to serve this purpose.
The May conference between Russia and China stands to be one of the most game changing points of the 21st century, with the potential consequences of the meeting being the declaration of the end of the petro-dollar, and U.S. hegemony over the global reserve currency. And with today's 'symbolic' announcement by Gazprom that they are looking at the issuance of a Yuan based bond, at the very least, it will bring about an alternative to the petro-dollar, and a way for nations around the world to buy energy outside of U.S. control.