Key facts
- China's yuan-denominated crude oil futures contract (SC) reached a record high of 929.4 yuan ($138.50) per barrel.
- The contract was launched in March 2018 and is traded on the Shanghai International Energy Exchange.
- The price surge followed a drone attack on a Saudi Arabian oil pipeline, causing a temporary shutdown.
- International benchmarks Brent Crude and WTI Crude also rallied amid fears of escalating Middle East conflict.
- Chinese refiners have been increasing their crude oil purchases in recent weeks.
China's yuan-denominated crude oil futures contract reached a record high this week, trading as high as 929.4 yuan, equivalent to $138.50 per barrel, on the Shanghai International Energy Exchange. The contract, launched in March 2018, is designed for physical settlement and priced in Chinese yuan.
The price surge was primarily driven by escalating concerns over oil supply from the Middle East following a drone attack on Saudi Arabia's East-West oil pipeline, which led to its temporary shutdown. This event has heightened fears of further conflict and potential disruption to oil flows through critical routes like the Strait of Hormuz.
International crude oil benchmarks also saw significant gains at the start of the week. Brent Crude prices reached $108 per barrel, while the U.S. benchmark, WTI Crude, traded above $103 a barrel. The Chinese futures contract, which tracks crude grades similar to Oman and Murban, saw prices for these crudes trading above $120 per barrel this week.
In addition to supply-side pressures, increased buying activity from Chinese refiners, who have been gradually increasing their crude oil purchases in recent weeks, has also contributed to the upward price movement in the yuan crude futures.