Are Iraq's oil sales shifting from petrodollars to petroyuan?

[6ly410]

Are Iraq's oil sales shifting from petrodollars to petroyuan?

 

Arabic & International / Translated Reports | Yesterday, 23:32 | 

Are Iraq's oil sales shifting from petrodollars to petroyuan? » Baghdad Today News Agency

 

 

Baghdad Today - Translation

International agencies and newspapers revealed on Wednesday news of an Iraqi-Chinese agreement for trade exchange in the local currencies of the two countries.

The Chinese newspaper Global Times, quoting statements by Chinese officials, translated by (Baghdad Today), said that "the Central Bank of Iraq agreed with the Chinese side, to pay the value of trade exchanges (including oil, which constitutes 90% of trade exchanges between the two countries) in Chinese yuan instead of the US dollar," pointing out that "this will lead to improving the position of the Iraqi dinar," but at the expense of "weakening Iraq's treasury of dollars."

Reuters described the move as "the first of its kind in history" to "globalize the Chinese yuan and use it as a global alternative to the US dollar currency."

The central bank has not reported the transfer of its oil sales from petrodollars to petroyuan so far.

 

[screwball]

13 minutes ago, 6ly410 said:

"the Central Bank of Iraq agreed with the Chinese side, to pay the value of trade exchanges (including oil, which constitutes 90% of trade exchanges between the two countries) in Chinese yuan instead of the US dollar," pointing out that "this will lead to improving the position of the Iraqi dinar,

👍

 

13 minutes ago, 6ly410 said:

Reuters described the move as "the first of its kind in history" to "globalize the Chinese yuan and use it as a global alternative to the US dollar currency."

👏👍

[screwball]

14 minutes ago, 6ly410 said:

The central bank has not reported the transfer of its oil sales from petrodollars to petroyuan so far.

this says agreement but not yet activated...second stage...have to remove all exchange rate restrictions...buy sell rate, no MCP no parallel rates

[Kmac]

https://www.zerohedge.com/economics/iraq-drop-dollar-yuan-trade-china

[screwball]

2 hours ago, 6ly410 said:

his will lead to improving the position of the Iraqi dinar,"

🙏

[divemaster5734]

Iraqi central bank to drop dollar for yuan in trade with China

Iraq is the latest nation in the Global South to move away from the US dollar in bilateral trade with China

ByNews Desk- February 22 2023

(Photo credit: AFP)

 

 

 

The Iraqi central bank announced on 22 February that, for the first time, it plans to allow trade from China to be settled directly in yuan instead of the US dollar to improve access to foreign currency.

“It is the first time imports would be financed from China in yuan, as Iraqi imports from China have been financed in (US) dollars only,” the government’s economic adviser, Mudhir Salih, told Reuters on 22 February.

According to a statement released by the Iraqi central bank, carrying out transactions in the Chinese currency would boost the balances of Iraqi banks with accounts with Chinese banks.

However, this option depends on the size of the central bank’s yuan reserves.

A second option to boost local banks’ yuan balances would involve converting US dollars held in the central bank’s accounts with JP Morgan and the Development Bank of Singapore (DBS) to yuan before paying the final beneficiary in China.

The Iraqi central bank has been on a mad dash to compensate for a dollar shortage in local markets. This crisis prompted the cabinet to approve a currency revaluation earlier this month.

Last year, the US Treasury and the Federal Reserve Bank of New York began enforcing stricter controls on international transactions by Iraqi commercial banks, forcing them to comply with specific SWIFT global transfer system criteria to access their foreign reserves.

The move was allegedly meant to “curtail money laundering and the illegal siphoning of dollars to Iran and other heavily sanctioned [West Asian] countries.” However, the sudden rules change for Iraqi banks sent the economy reeling as 80 percent, or more of Iraq’s daily US dollar wire transfers could no longer be completed.

Last week, a senior Iraqi delegation visited the US capital to discuss easing the US Treasury measures. Following the trip, Foreign Minister Fuad Hussein denied reports that Washington imposed conditions on Baghdad to help with the dollar crisis.

Hussein added that it is “only a matter of time” before the exchange rate stabilizes.

Since the war in Ukraine started, several nations in the Global South have begun to move away from the US dollar in bilateral trade with China. Many others have chosen to boost their Chinese yuan reserves at a time when the hegemony of the greenback continues to weaken.

[ronscarpa]

Iraq-China Trade to be settled in Yuan

23rd February 2023 in Iraq Banking & Finance News, Iraq Industry & Trade News

By John Lee...Iraq Business News

 

The Central Bank of Iraq (CBI) said on Wednesday that it plans to allow trade from China to be settled directly in yuan, in a renewed attempt to stabilise the value of the Iraqi dinar.

 

In a statement, it said foreign trade financing will be conducted through direct channels in China using the Chinese yuan currency. There are two available options to facilitate this process:

1. Reinforcing the account balances of Iraqi banks that have established accounts in Chinese banks which are denominated in Chinese yuan; and,
2. Strengthening the account balances of Iraqi banks via the CBI, ultimately transferring funds to the final beneficiary in Chinese yuan currency. This can be done through the CBI's accounts with both JP Morgan and the Development Bank of Singapore (DBS).
3.  

According to Reuters, the move is the latest sign of the yuan's growing role on the international stage, as China gradually opens up its financial markets, and some countries look to diversify their currency exposures.

 

Original announcement here (Arabic).

(Sources: CBI, Reuters)

https://www.iraq-businessnews.com/2023/02/23/iraq-china-trade-to-be-settled-in-yuan/

[coorslite21]

Crude oil prices today - Oilprice.com

BREAKING NEWS: 

Iraq Announces String Of Deals To Boost Oil And Gas Output

By Charles Kennedy - Feb 25, 2023, 4:00 PM CST

Iraq has been saying it wants to produce more oil and gas for a while now but turning stated ambitions into reality has taken a while.

This week, the country took a big step towards that reality when it signed a slew of deals with foreign companies as part of plans to boost both crude oil and natural gas production considerably.

Gas production growth appears to be especially important because right now, Iraq is heavily reliant on neighbor Iran for its gas needs, which puts it into a vulnerable position.

The government in Baghdad inked deals with one Emirati company and two Chinese ones, aiming for oil production growth of a quarter of a million barrels daily and additional natural gas output of 800 million cu ft daily.

Iraq is OPEC's second-largest oil producer, pumping 4.5 million barrels every day. In previous years government officials have said production capacity could grow to 5 million bpd and even 6 million bpd but little has been done to advance these plans.

The reasons for that slow progress include the politically unstable situation in the country, the dynamics of the oil industry that has seen companies prioritize low-cost, fast-return projects after the last two downturns, and predictions of peak oil demand.

Several oil majors, including Exxon, left Iraq altogether in the past few years, citing the uncertain outlook for its oil industry. Yet successive governments did not give up their plans for greater oil production despite the OPEC+ output quotas, and significantly higher natural gas production.

Related: The 13 U.S. States That Raised Gasoline Taxes For 2023

One of the companies that will be helping Iraq advance these plans is UAE-based Crescent Petroleum. The firm signed three long-term contracts for the exploration and development of three oil and gas fields.

Two of these fields-Gilabat-Qumar and Khashim, in the province of Dyala-are expected to begin producing natural gas within 18 months at a rate of 250 million cu ft daily, Crescent Petroleum said. The third field that Crescent Petroleum will explore is in the province of Basra.

The second of Baghdad's new oil and gas development partners, Chinese United Energy Group inked a deal with the government to develop the Sindbad oil field, also in Basra.

The third company that signed a deal with the Iraqi government was also Chinese, Geo-Jade Petroleum Co. It will develop the Huwaiza oil field and the Naft Khana field, both near the Iranian border, Reuters noted in a report on the news.

All the contracts signed this week have a duration of 20 years and should help boost Iraq's energy security in the natural gas department, reducing its bill for gas imports from Iran at a time when its economy is struggling to remain operational.

As a result of the deals signed this week, Iraq could suspend natural gas imports in three years, according to Prime Minister Mohammed Al-Sudani. Commenting on the deals, Al-Sudani said gas imports from Iran are costing the Baghdad budget between $5.5 and $6.8 billion a year, Zawya reported.

"We have decided to enter the global gas market and we will push ahead with projects to develop our gas resources and stop gas flaring because shortages in domestic gas supply are the main cause of our electricity supply problems," Al-Sudani said.

To further these plans, Iraq will also launch tenders for exploration blocks in the northern, western and central parts of the country in the near future, Oil Minister Hayan Abdel-Ghani said this week.

Oil output should also grow. According to the IMF, this year, Iraq could produce 4.6 million bpd, up from 4.4 million bpd last year, The National reported. By 2027, oil production could reach 5 million bpd, the IMF also forecast. Perhaps Iraq's oil and gas ambitions finally have a chance of panning out.

By Charles Kennedy for Oilprice.com

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