The Chinese move was an instant success, with trading volumes overtaking traditional Brent futures in London on the opening day. It remains to be seen how the pattern will settle down long-term, but the Chinese authorities will have been encouraged by the launch, and participation from some big global energy traders, such as Glencore and Trafigura, in the new contracts. The move potentially has historical significance. Although now just a futures contract — a bargain to pay for oil in yuan in future — it could turn into a strategic play by the Chinese to pay for oil imports in yuan, rather than the US dollar, which has dominated the world oil industry for most of its existence. Oil is the biggest traded commodity in the world, and the international foreign exchange markets are the biggest traded financial instruments, so the Chinese move has potentially seismic implications for the global economy. The Chinese are also, according to reports, planning to persuade oil exporters to accept payment for their crude in yuan later this year, which would be the logical next step from the new futures contract. That would be tantamount to a declaration of war against the US dollar as the global petrocurrency. Some oil men are already taking about the forthcoming “petro-yuan.” If the threat to the global supremacy were not clear enough, the Chinese move comes against the backdrop of an increasingly bitter commercial battle between the US and China. We are now past the stage where talk of a global “trade war” is just speculation. Moves by the Trump administration to impose tariffs on Chinese steel and aluminum imports have been met by retaliatory measures against US imports into China, with a 25 percent surcharge slapped on more than 100 American products, from cars to soybeans. The launch of yuan-denominated oil futures on the Shanghai International Energy Exchange last week threatens to upend traditional trading patterns for crude, giving Saudi Aramco a headache in the lead-up to its much-heralded initial public offering (IPO). Frank Kane Who knows where this will end? The Chinese have the potential “nuclear” option of dumping their one trillion-plus dollars in US Treasury bills, but that would risk mutually assured destruction of the financial systems of the world’s two biggest economies — a potential global catastrophe. We are not at that stage yet, but already China’s move toward the petro-yuan is giving Saudi Aramco pause for thought. The matter was sure to have been discussed with some of the big financial institutions the Saudis met in New York last week as part of the royal visit to the US. It is another unwelcome variable in Aramco’s long-term strategic planning and its preparations for potentially the biggest IPO in history. Saudi Arabia remains firmly committed to the dollar peg for the riyal, which has been in place for more than three decades, and to the continued dominance of the dollar as the medium of payment for its main export. Those in the Aramco camp who want to see the IPO take place on American markets would surely resist any move away from either the peg or the petrodollar as an unnecessary complication in global energy markets at a time when stability — in the oil price and supplies — is the top priority. On the other hand, Saudi Arabia has been keen to extend its commercial partnership with China, both to ensure a long-term eastern market for crude in the world’s biggest oil-consuming economy and to hedge against the surge in American oil exports sparked by the shale boom. This eastward-looking focus for Aramco has been concentrated by the possibility big Chinese investors might become anchor investors in the IPO process, taking a significant chunk of the 5 percent of Aramco shares on offer ahead of any stock market action. If talks with the Chinese are taken further, a commitment by the Saudis to support the petro-yuan could be a sweetener in a deal that gets the best possible price for Aramco shares, helping to nudge it closer to the $2 trillion valuation put on the company. It would take a lot for Aramco to be persuaded away from the dollar, which would have big consequences for the Saudi-US business partnership cemented by the royal visit. For this reason, Aramco is likely to stay with the dollar market for the foreseeable future. But with everything else going on in the IPO preparations, the emergence of the petro-yuan is a development Aramco did not need. Frank Kane is an award-winning business journalist based in Dubai. He can be reached on Twitter @frankkanedubai