India Turns to Rupee, Dirham and Yuan
for Russian Oil Payments as War and Sanctions Pressure the Dollar-Based Oil Trade
·
Russia Withdraws Discounts on Oil as Booms
1.
Indian refiners
are increasingly paying for Russian oil using alternative currencies instead
of the US dollar.
2.
Payments are
being made by depositing rupees into special overseas accounts of Russian
sellers, which are later converted into the UAE dirham or Chinese yuan.
3.
The shift
is happening as Indian companies try to reduce dependence on the dollar amid
rising geopolitical tensions and uncertain US policy.
4.
The United
States recently granted India a temporary waiver to increase purchases of Russian
oil, but the waiver is set to expire on April 11.
5.
Ahead of the
deadline, Russian oil companies are pushing for long-term payment arrangements
in non-dollar currencies.
6.
India has
sharply increased imports of Russian oil after the conflict in Iran disrupted global
supplies and pushed crude prices above $100 per barrel.
7.
Major Indian
refiners, including Indian Oil and Reliance Industries, have already bought around
60 million barrels of Russian crude under the waiver.
8.
Apart from
the dirham and yuan, companies are also exploring payments in Singapore dollars
and Hong Kong dollars, depending on bank support.
9.
Some Indian
banks with limited global exposure are helping facilitate these transactions.
10. Analysts say the shift could weaken the dominance
of the US dollar in global oil trade if more countries start using alternative
currencies.
11. The situation shows how geopolitical conflicts are reshaping
global energy trade and financial systems, especially for large oil-importing
countries like India.
Indian
refiners are increasingly settling purchases of Russian oil in alternative currencies,
according to people familiar with the matter, as they seek to reduce reliance on
the dollar amid rising geopolitical tensions and shifts in US policy.
Transactions
are being carried out by depositing Indian rupees into special overseas bank accounts
held by Russian sellers which are then being converted into UAE’s dirham or the
Chinese yuan, the people said, who asked not to be identified because the information
is private. Some Indian banks with limited offshore presence are facilitating the
trades, they said.
While
the US earlier this month granted India a waiver to ramp up purchases of Russian
oil, it is set to expire on April 11. Ahead of that deadline, some Russian oil firms
are pushing for more durable arrangements, seeking payment in alternative currencies
to limit exposure to shifting US policy.
India’s
Finance Ministry did not immediately respond to a Bloomberg News email seeking comment.
The
shift comes as Indian firms ramp up oil purchases following massive supply disruption
caused by the conflict in Iran, which has driven global crude prices over $100 a
barrel. Refiners in the South Asian nation, including Indian Oil Corp. and Reliance
Industries Ltd, have purchased about 60 million barrels of Russian oil since the
US issued the waiver.
In
addition to the dirham and yuan, firms are also considering the Singapore dollar
and Hong Kong dollar, though transactions depend on individual banks’ comfort levels,
one of the people added.
In
a note on Tuesday, Deutsche Bank said the conflict is testing the dollar’s role
as the currency for global oil trade, with one long-term consequence being a potential
shift toward the yuan.