As the Ukraine-Russia war drags on, Indian refiners have begun paying for some oil imports from Russia in Chinese yuan, sources with direct knowledge of the matter said on Monday. Moscow’s customers have been forced to find alternatives to the dollar for settling payments due to Western sanctions on Russia.
Punitive sanctions due to Russia’s invasion of Ukraine have shifted global trade flows for its top export, with India emerging as the largest buyer of seaborne Russian oil even as it casts about for how to pay for it amid shifting sanctions. The U.S. dollar has long been the main global oil currency, including for purchases by India, but now the yuan is playing an increasingly important role in Russia’s financial system because Moscow has been frozen out of the dollar and euro financial networks by international sanctions.
“Some refiners are paying in other currencies like yuan if banks are not willing to settle trade in dollars,” said an Indian government source. Indian refiners have also settled some non-dollar payments for Russian oil in the United Arab Emirates’ dirham, sources have said.
Indian Oil Corporation in June became the first to pay for some Russian purchases in yuan, three sources familiar with the matter said. All the sources declined to be named because of the sensitivity of the matter. At least two of India’s three private refiners are also paying for some Russian imports in yuan, two other sources said. India is also mulling reviving the Rupee-Rouble mechanism, previously used in 1953 as an alternative payment mechanism to settle dues in rupees instead of Dollars or Euros.
None of India’s private refiners — Reliance Industries Ltd, Russia-backed Nayara Energy and HPCL Mittal Energy Ltd — responded to requests for comment. Indian Oil also did not reply to a request for comment. There was no response from India’s Oil and Finance Ministries either.
It could not immediately be determined how much Russian oil Indian refiners have bought with yuan, although Indian Oil has paid in yuan for multiple cargo loads, sources said. Since the imposition of sanctions on Moscow, Indian refiners have mostly bought Russian crude from Dubai-based traders and Russian oil companies such as Rosneft, and Gazprom Neft, according to shipping data compiled by Reuters.
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