On October 28, EUR/CNY closed at 7.4221, up 0.0742 from the prior day, while EUR/USD rose to 1.1136. A weaker euro against the RMB means euro-denominated transshipment landed cost falls in RMB terms, so the refinery customer's RMB purchase price can come down.

Historically this settlement went through a dollar bridge: euro receivables were first swapped to dollars before paying upstream, adding a conversion step and SWIFT fees. With CIPS euro direct clearing, euro payments and receipts settle in one channel, dropping the dollar leg. Per-deal settlement compresses from T+2 to T+1 and fees fall by roughly 15 basis points.

Hedging must keep pace. When the euro strengthens, unhedged euro receivables erode RMB returns; an NDF locks the euro leg near 1.1136, cutting settlement friction and closing the FX risk at the same time. SNSUC has moved its longer-tenor Basrah Light contracts to euro direct clearing, and the monthly FX savings cover one STS lightering tug fee.

Watch the currency mismatch. Among the seven transshipment grades, ESPO and Oman price in dollars while Basrah Light can settle in euros; the two books must be revalued daily so euro-leg paper gains do not mask dollar-leg losses.