The head of Global Commodities at JP Morgan, Natasha Kaneva, told The Wall Street Journal that giant oil conglomerates and exporters of natural oil are sealing deals away from the US dollar. 

This comes a day after Russia and Iran, two major oil exporters, settled an agreement that enables their countries to trade natural oils and resources in their national currencies. The deal also entails selling their commodities to China and India at a discount. 

“The US dollar is getting some competition in commodities markets," remarked Kaneva, noting that 20% of the oil shares are being traded in currencies other than the US dollar. 

Other major commodity-selling nations, like Brazil, UAE, and Saudi Arabia, have also contemplated groundwork that does not rely on the US dollar. 

JP Morgan data showed that in 2023, 12 major trade deals were struck in currencies other than the US dollar, compared to 2022's seven. In 2015 through 2021, on the other hand, only 2 deals were made in non-dominant currencies. 

This is exclusive to physical commodity deals and does not entail trading in financial markets. This year, non-dollar contracts were reportedly settled by sellers in Russia, with just one case registered in the UAE.

Read more: Iran, Russia to scrap USD in bilateral trade for national currencies

Major non-dollar deals shifting the global trade reality

In October, it was reported that India and the UAE were looking into the possibilities of creating a mechanism for carrying out bilateral trade in their national currencies.

The negotiations to trade in their local currencies came days after the Indian Directorate General of Foreign Trade made amendments to its trade policy, effectively allowing Indian importers and exporters to pay and receive Indian rupees. 

In addition, the two countries have also agreed to proceed in discussions on generalizing India's Unified Payment Interface (UPI) to be the go-to digital payment platform for facilitating and settling trade payments. 

Moreover, Saudi Arabia was in active negotiations with Beijing to price part of its oil supplies to China in Yuan, a move that would undermine the US dollar's domination of the global petroleum market and represent another turn by the world's top crude exporter toward Asia.

The deal was signed last month, with a local currency swap worth 50 million Yuans, the equivalent of 7 billion dollars, was established. 

Currently, the US dollar controls 88% of the global trade market, but as non-dollar deals increase and new trade axes emerge in a dodge at US hegemony, the reality is prone to change. 

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