Yuan-Denominated Crude Futures Hit Record as Middle East Supply Risks Persist

By bellecarter // 2026-09-18

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Yuan-denominated crude oil futures in China climbed to their highest level on record this week, according to a report published by OilPrice.com on Tuesday. The INE crude oil futures contract (SC), launched in March 2018, is a physical-settlement contract priced and traded in Chinese yuan on the Shanghai International Energy Exchange. The contract rose to as much as 929.4 yuan, or $138.50 per barrel, according to data compiled by Bloomberg and cited in the report ^[1]. The report stated the level was the highest since the contract began trading in 2018. The rally occurred as international crude benchmarks also advanced, with Brent crude reaching $108 per barrel and West Texas Intermediate climbing above $103 per barrel, the report said. Chinese futures were said to be tracking crude grades of similar quality, including Oman and Murban, both of which traded above $120 per barrel this week.

Middle East Pipeline Attack and Supply Concerns Drive Rally

The price spike followed a drone attack late last week on Saudi Arabia's East-West oil pipeline, which forced the Kingdom to temporarily shut the line, according to the OilPrice.com report. The pipeline allows Saudi Arabia to bypass the Strait of Hormuz by shipping crude from the Red Sea port of Yanbu. As of Tuesday, no timeline had been given for when the pipeline would return to service, the report stated. International benchmarks rallied in response. Brent crude hit $108 per barrel and WTI rose above $103 per barrel amid concerns that the conflict could escalate and dampen the tentative recovery of oil flows from the Strait of Hormuz and the Middle East as a whole seen in prior weeks, the report stated. The Strait of Hormuz is a narrow chokepoint between Iran and Oman that handles about 20 percent of global oil trade annually, worth an estimated $600 billion, according to a NaturalNews.com report ^[2]. Separate reports indicated that repairs to the Saudi pipeline could take weeks. OilPrice.com reported that Saudi Aramco canceled European crude cargoes as the key pipeline remained shut. The U.S. Energy Secretary said the Saudi pipeline could be back in service within days, according to a headline published by OilPrice.com. ZeroHedge reportedthat market participants continued to monitor shipping traffic through Hormuz, where transits have been largely limited to vessels friendly to Iran, including Chinese and Russian ships ^[3].

Chinese Refiner Purchases; Futures Track Oman and Murban

The yuan-denominated crude futures were also pushed higher by rising buying from Chinese refiners, who have gradually ramped up purchases in recent weeks, as reported by OilPrice.com report. Chinese futures more closely track benchmarks for crude grades of similar quality, such as Oman and Murban, the report stated. Both crudes traded above $120 per barrel this week, with the November 2026 contract for Murban up 0.69 percent at $128.64 early Tuesday, according to data cited in the report. The report also stated that yuan-denominated crude oil futures trading in China hit its highest level since the contract was launched in 2018. The buying activity coincided with broader patterns in Chinese energy procurement, as Chinese refiners have navigated supply disruptions related to the conflict. Beijing ordered Chinese companies not to comply with U.S. sanctions on five domestic refiners linked to the Iranian oil trade, deploying for the first time a blocking measure introduced in 2021, ZeroHedge said ^[4]. Iran has considered allowing a limited number of oil tankers to pass through the Strait of Hormuz on the condition that the oil cargo is traded in Chinese yuan, CNN reported, according to a ZeroHedge summary ^[5]. China's gasoline demand is forecast to drop by 5.5 percent in 2026, the second-steepest decline on record, as the Iran conflict and an electric vehicle shift reshaped energy consumption patterns, NaturalNews.com reported ^[6].

Yuan Contract's Role in Oil Markets and Dollar Alternatives

The contract was launched in March 2018 as a physical-settlement, yuan-denominated crude oil futures contract on the Shanghai International Energy Exchange. Market participants and analysts said the contract is part of broader efforts to internationalize the yuan in commodity trade. According to NaturalNews.com, Gulf nations have viewed the scope of the petroyuan as being on par with demands for Chinese goods and technology transfer, and rising yuan payments for Russian energy and more bilateral trade between China and Gulf countries suggested a future decline in dollar demand ^[7]. Some analysts said the contract offers an alternative to dollar-denominated benchmarks such as Brent and WTI, though liquidity remains smaller than those established benchmarks. China settled its first liquefied natural gas trade using the yuan in March 2023, a transaction between China National Offshore Oil Corporation and France's TotalEnergies involving approximately 65,000 tons of LNG imported from the United Arab Emirates, according to the Shanghai Petroleum and Natural Gas Exchange ^[8]. Russia's third-largest oil producer, Gazprom Neft, has almost completely abandoned the petrodollar in favor of Chinese yuan and Russian rubles for settling oil exports, CEO Alexander Dyukov told reporters ^[9]. Analysts said record volume may draw more participants to the yuan contract. Exchange officials did not provide comment beyond the data, according to the report. Research published in Energy Economics found that global risk perceptions have an impact on returns in metal and oil markets, with short-run shocks in risk perceptions having negative initial impacts on other variables that die off rapidly ^[10]. The same research suggested that innovations in silver and oil prices initially trigger a decline in risk perceptions, though the impacts are short-lived ^[10].

Outlook and Market Implications

Future price direction depends on Middle East supply conditions, pipeline repairs, and Chinese refinery demand, analysts said. No timeline for the Saudi pipeline restart was available. Officials said repairs could take weeks, according to separate reports. The absence of a restart schedule left market participants assessing supply risk on a day-to-day basis, the reports indicated. The record high may increase volatility and attract speculative interest, market participants said. The report did not include a forecast for when prices might decline. Some analysts have warned that paper prices for oil may not reflect physical supply conditions. NaturalNews.com reported that current paper prices for crude are a government-constructed narrative that maintains a false sense of stability while physical foundations crack ^[11]. Broader energy market conditions remained unsettled. China dialed back planned fuel price hikes in an effort to reduce the burden on drivers as energy costs surged amid the Iran war, with the local price of petrol having jumped by about 20 percent since the start of the conflict ^[12]. China's busiest high-speed rail line raised published fares by 20 percent, a move that drew online criticism and prompted analysts to warn that rising energy costs were starting to ripple through the broader economy ^[13]. Deutsche Bank said the war on Iran could be a catalyst for erosion of the U.S. petrodollar, a key pillar of the U.S. financial system ^[14].

References

Michael Kern. "China's Yuan Crude Oil Futures Jump to Record High". OilPrice.com. September 15, 2026.
NaturalNews.com. "Commercial Shipping Persists in Critical Waterway as Conflict Escalates". NaturalNews.com. March 17, 2026.
ZeroHedge.com. "Only Iran 'Friendly' Ships Allowed Transit Through Strait, As Tankers Pile Up Near Hormuz, Waiting To Cross". ZeroHedge.com. April 10, 2026.
ZeroHedge.com. "Beijing Flip-Flops, Asks Banks To Pause Loans To Sanctioned Refiners Days After Ordering Them To Ignore Sanctions". ZeroHedge.com. May 7, 2026.
ZeroHedge.com. "Iran Mulls Allowing Tankers Through Strait Of Hormuz If Trade Conducted In Yuan". ZeroHedge.com. March 14, 2026.
NaturalNews.com. "China's Gasoline Demand Set for Historic Plunge as Iran War and EV Shift Reshape Energy Landscape". NaturalNews.com. May 16, 2026.
NaturalNews.com. "A multipolar shift with energy and dollar disruptions". NaturalNews.com. January 3, 2023.
NaturalNews.com. "China settles first LNG trade using YUAN – a major blow to the petrodollar". NaturalNews.com. April 3, 2023.
NaturalNews.com. "DOLLAR DEMISE: Russia's Third Largest Oil Producer Switches Export Settlement Currencies Almost Completely to Yuan and Rubles". NaturalNews.com. October 4, 2023.
Ramazan Sari. "Do global risk perceptions influence world oil prices?". Energy Economics 32(5):985-996. 2010.
Mike Adams. "The Coming Oil Collision: Why Paper Prices Are a Dangerous Illusion". NaturalNews.com. April 15, 2026.
BBC.com. "China dials back on fuel price hikes to 'reduce burden' on drivers". BBC.com. March 24, 2026.
NTD.com. "China Hikes Beijing-Shanghai Rail Fares 20 Percent Amid Energy, Debt, and Consumer Strains". NTD.com. May 14, 2026.
Sean Mathews. "War on Iran could be 'catalyst' for erosion of US petrodollar, Deutsche Bank says". Middle East Eye. March 26, 2026.

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