Russian oil traders have begun asking Indian refiners to pay in Chinese yuan instead of US dollar or UAE’s dirham, which had long dominated oil transactions .
This comes in the wake of improving relations between New Delhi and Beijing, offering traders an opportunity to simplify deals with Indian buyers, sources cited by Reuters said.
Recently, the country's top refiner, state-owned Indian Oil Corp paid for two to three Russian oil shipments in yuan.
Ever since Western sanctions were imposed on Russia after its 2022 invasion of Ukraine, oil buyers have been using currencies other than the US dollar, such as the yuan and the UAE dirham, to settle deals.
In 2023, some Indian state refiners tried paying for Russian oil in yuan, but stopped after the government raised concerns during a period of tense India-China relations, Reuters reported. Private refiners, however, continued to deal in Chinese currency.
One trader explained that until now, the traders had to convert payments in dirhams or dollars into yuan, since only yuan can be directly exchanged into rubles to pay the producers.
They are now seeking to remove one costly step from the process, Reuters reported.
Sources also said that traders were still pricing Russian oil in dollars to comply with the European Union’s price cap, while seeking payment in yuan.
India has become the largest importer of discounted Russian seaborne oil, after Western nations suspended purchases from Moscow due to sanctions. Using yuan could make Russian oil more widely available to Indian state refiners, as some sellers would not accept other currencies, the sources added.
The move comes as India-China ties improve. Direct flights between the countries have resumed after more than five years, and PM Narendra Modi visited China last month for the first time in seven years to attend a Shanghai Cooperation Organisation meeting.
This comes in the wake of improving relations between New Delhi and Beijing, offering traders an opportunity to simplify deals with Indian buyers, sources cited by Reuters said.
Recently, the country's top refiner, state-owned Indian Oil Corp paid for two to three Russian oil shipments in yuan.
Ever since Western sanctions were imposed on Russia after its 2022 invasion of Ukraine, oil buyers have been using currencies other than the US dollar, such as the yuan and the UAE dirham, to settle deals.
In 2023, some Indian state refiners tried paying for Russian oil in yuan, but stopped after the government raised concerns during a period of tense India-China relations, Reuters reported. Private refiners, however, continued to deal in Chinese currency.
One trader explained that until now, the traders had to convert payments in dirhams or dollars into yuan, since only yuan can be directly exchanged into rubles to pay the producers.
They are now seeking to remove one costly step from the process, Reuters reported.
Sources also said that traders were still pricing Russian oil in dollars to comply with the European Union’s price cap, while seeking payment in yuan.
India has become the largest importer of discounted Russian seaborne oil, after Western nations suspended purchases from Moscow due to sanctions. Using yuan could make Russian oil more widely available to Indian state refiners, as some sellers would not accept other currencies, the sources added.
The move comes as India-China ties improve. Direct flights between the countries have resumed after more than five years, and PM Narendra Modi visited China last month for the first time in seven years to attend a Shanghai Cooperation Organisation meeting.
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