Rise of the RMB: Shaking the Foundation of Petrodollar Hegemony
The entire world of global finance has seen a tectonic shift. In recent months, the RMB has made an astonishing leap in the field of oil settlement. Data show that since March, the proportion of Middle Eastern oil being settled in Renminbi has risen to 41%. This marks the first time it has become global trade's second largest settlement currency for crude oil. Meanwhile, the dollar's share has dropped to below psychological threshold of 55%. Just a few years ago, the dollar had an absolute monopoly on more than 90% of Middle East oil settlements. That is the severest blow to the petrodollar system since it emerged over half a century ago.
The RMB's Accelerating Internationalization
Many astonishing figures highlight the rapid internationalization of the RMB. Saudi Aramco, the world's largest oil company, now uses 45% of its crude oil exports to China as payment in RMB. This was previously unheard of. Russia goes even further since more than 90% of all trade with China for both oil and gas is settled in Renminbi.
This effectively ends the dollar's hold on Russia's export earnings. Commodities developers such as Australia and Brazil have also started to use the RMB for transactions in non-ferrous metals, soya beans and other major commodities. The RMB is growing quickly from a local currency to a genuine "semi-international currency."
The Rise of the RMB Is Underpinned by Two pillars
Why has the RMB achieved rapid progress in oil settlements? China has two tools which can strike at the very heart of dollar hegemony. The first is "Cross-border Interbank Payment System" (CIPS). This allows Middle East oil exporters to bypass the US-controlled SWIFT system for cross border payments, eliminating any risk of arbitrary freezes on the accounts by United States authorities.
The second is the crude oil futures market at the Shanghai International Energy Exchange. After years of development, it has become the third largest crude oil futures market in the world and a secure platform for hedging and trading. With these two safeguards, Middle East countries are finding RMB settlements convenient and secure.
The Dollar's Emergence Is Perhaps Not Unrelated to the RMB as a Safe Haven
The rise of the RMB can be largely attributed to the actions of former US President Trump. Kenneth Rogoff, former IMF chief economist and professor at Harvard, said bluntly, "The dollar is in the twilight of its legitimacy and the RMB will become a reserve currency within five years." But Trump's frequent financial sanctions and abuse of dollar hegemony let people see the danger of relying too heavily on the dollar.
Also, throughout turmoil in the Middle East, largely Middle East money is home coming to China. RMB assets are being viewed as a "safe haven". At the same time around the world central banks are gradually accumulating gold, and for the first time in 2025 world gold reserves surpassed the US Treasury's holdings. Last year, the dollar index fell 9.4%, its worst performance in eight years.
The Future Forecast
As for the future of the RMB, Rogoff is confident. He forecasts that in five years, the RMB will join the ranks of official global reserve currency and by then there will be a flood of foreign investment into China. CIPS has already set new records, with single-day transaction volumes over 1.22 trillion yuan and average daily volumes reaching 920.5 billion yuan, the highest in 12 months.
These numbers tell the story of RMB internationalization gaining momentum. Nevertheless, dollar hegemony will not fall overnight. The dollar remains the leading currency of world finance, but the cracks in the petrodollar system are widening. This represents a profound shift in the asymmetry of global power: time from petrodollar to petro-RMB, marked not simply by currency changes but also by new international forces emerging. As more countries pursue alternatives to the dollar-based system, we are beginning an era unprecedented in its changes.
