India refiners start yuan payments for Russian oil imports

Indian refiners have started paying for certain oil imports from Russia in Chinese yuan, Reuters reported quoting sources on Monday. This move comes as Western sanctions on Moscow and its customers have prompted them to seek alternatives to the dollar for settling payments.

The imposition of sanctions on Russia over its military operation in Ukraine has disrupted global trade flows for its primary export, with India emerging as the largest buyer of Russian seaborne oil. In June, India’s imports of Russian oil reached a new all-time high.

According to Viktor Katona, the head of crude analysis at Kpler, daily volumes of Russian oil climbed to 2.2 million barrels, marking the tenth consecutive month of increase. Data from the analytics firm indicate that Russian purchases once again surpassed the combined shipments of Saudi Arabia and Iraq.

However, India has been grappling with how to pay for these imports due to the shifting sanctions landscape.

Traditionally, the US dollar has served as the main global oil currency, including for India’s purchases. But, since the start of Ukraine conflict, the Chinese yuan is increasingly playing a significant role in Russia’s financial system because Moscow has been excluded from the dollar and euro financial networks by international sanctions, Reuters added.

China has already transitioned to using the yuan for the majority of its energy imports from Russia.

According to three sources familiar with the matter, Indian Oil Corp, the largest purchaser of Russian crude oil in India, became the first state refiner in June to make yuan payments for certain Russian purchases.

MNA/PR