The price of Yuan-denominated crude oil futures in China reached its highest level since the launch of this contract in 2018 this week. This price increase is due to rising threats to Middle Eastern oil supply and increased purchases by Chinese refineries.
Details of the Yuan-denominated crude oil futures contract
The Yuan-denominated crude oil futures contract (INE), launched in March 2018, is a physically settled contract traded in Yuan on the Shanghai Energy Exchange. The price of crude oil futures reached 929.4 Yuan ($138.50) per barrel, indicating a significant increase in prices. This price rise followed recent attacks on East-West oil pipelines in Saudi Arabia, which led to a temporary halt of this pipeline.
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Factors influencing the rise in oil prices
Following the attacks on oil pipelines, there are increasing concerns over oil supply from the Middle East. These attacks have caused Saudi Arabia to temporarily halt its pipelines that allow bypassing the Strait of Hormuz. As a result, international oil prices also rose at the beginning of this week. For example, Brent crude oil prices reached $108 per barrel, and West Texas Intermediate (WTI) prices rose above $103 per barrel.
This price increase is also influenced by the rising purchases of Chinese refineries, which have gradually increased their purchases in recent weeks. This trend, along with concerns about escalating tensions in the Middle East, has caused Yuan-denominated crude oil futures prices to increasingly align with international prices.
Key points in the oil market
The prices of Oman and Murban crude oil, which are considered benchmarks for similar quality to Yuan-denominated crude oil, are trading above $120 per barrel this week. The Murban crude oil futures contract for November 2026 has also increased by 0.69% to $128.64 per barrel. These developments could have serious implications for the global oil market and China's energy supply strategies.
Currently, there is no specific timeline for the reopening of Saudi oil pipelines, and this could have further impacts on the oil market and prices in the near future. This situation reflects the instability and complexities involved in oil supply from the Middle East, which can have significant economic and political repercussions, especially under current conditions.
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