Dominant Dollar Faces Challenges in the Oil Markets

Several emerging economies are exploring commodity trade without the U.S. dollar to decrease their dependence on it. Countries like Russia and Iran, hindered by U.S. sanctions, have increased oil sales in alternative currencies, finding willing buyers in nations such as China and India, often at reduced prices. While less critical for other major commodity exporters, countries like Brazil, the UAE, and even Saudi Arabia are making moves to enable non-dollar trades. Natasha Kaneva from JPMorgan Chase notes a significant shift, with approximately 20% of global oil now traded in currencies other than the dollar. The trend is highlighted by a rise in major non-dollar commodity contracts, growing from just two between 2015-2021 to twelve in 2023, primarily involving Russian and one UAE seller. These figures refer to physical commodity transactions, not futures trading in financial markets.