Inspenet, July 4, 2023.
According to sources cited by Reuters , some Indian refineries have chosen to pay part of the crude shipments purchased from Russia with yuan. This decision is part of Moscow’s efforts to find alternatives to the US dollar due to sanctions, while the Asian country seeks to buy crude oil at discounts.
India and Russian oil
In recent years, India has become one of the main importers of Russian crude, along with China. Western-imposed sanctions and Russian oil price caps have led to a significant increase in Russian crude imports by the aforementioned country.
India’s crude oil imports from Russia are estimated to have hit a new record high of 2.2 million barrels per day (bpd) in June, having seen an increase for the past 10 consecutive months.
Despite Russia’s invasion of Ukraine and international tensions, India has gone from being a marginal buyer of Russian crude to becoming the most important market for Moscow’s oil, along with China. Its refiners, which are not subject to G7 price caps and are looking for cheaper buying opportunities, have taken advantage of the situation and bought large shipments of Russian Ural oil, which was previously destined for northwestern Europe before the embargo imposed by the European Union.
According to sources quoted by Reuters, Indian Oil Corporation, India’s state giant, became the first state refiner to pay in yuan for Russian crude during the month of June. In addition, at least two of the three private refineries have also transacted yuan crude in recent weeks.
Initially, these refineries prefer to pay in US dollars, but in case this is not possible, for example, if the banks are not willing to settle transactions with Russia in dollars, they choose to make payments in other currencies such as US dirhams. the United Arab Emirates or yuan, an anonymous government source told Reuters.
These yuan payments for Russian crude are part of efforts by both Russia and China to reduce reliance on the US dollar in international trade. Over the past year, Russia has turned to yuan trading in response to Western sanctions that have hit its energy exports, imports and trade.
The Chinese currency has become the only alternative for Putin in his strategy to reduce exposure to the US dollar and the euro, thus mitigating the consequences of sanctions that have led to the seizure of Russian state assets in Western countries.
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