Global Commodities: US dollar is increasingly less important for oil prices. Implications for EM.

A structural shift is observed in the global energy markets, where big buyers of energy can now buy energy at a discount from sanctioned Russia, Iran and Venezuela, countries that combined represent close to 20% of the global oil exports. Crucially, this oil is now either sold in the local currencies of the buyers or in currencies of countries that are perceived as friendly. Consequently, US dollar now plays a more diminished role in determining oil prices. This de-dollarization trend in the commodity trade is a boon for some EM countries, which can now not only buy oil at a discount but pay for it with their own local currencies. This reduces the need for precautionary reserves of US dollars, US Treasuries and oil, which in turn might free capital to be deployed in growth-boosting domestic projects. Speakers: Natasha Kaneva, Global Commodities Jahangir Aziz, EM Economics This podcast was recorded on July 14, 2023. This communication is provided for information purposes only. Institutional clients can view the related reports at  https://www.jpmm.com/research/content/GPS-4459447-0, for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.