[Text/Observer Network Qi Qian]
Recently, Russian oil traders have begun asking Indian state-owned refineries to pay in yuan, Reuters reported on October 7. The source said that after the improvement of Sino-Indian relations, Russian oil sellers saw this as an opportunity to simplify transactions with Indian buyers.
The person familiar with the Indian company's Russian oil procurement revealed that recently, Indian Oil Company, India's largest refiner, has paid for two to three shipments of Russian oil in RMB. Indian Oil did not immediately respond to a request for comment.
The source told Reuters that Russian oil traders previously allowed buyers to pay in yuan, dirham and dollar, but subsequently they needed to convert the dirham or dollar payment into yuan, because only yuan can be directly exchanged into rubles.
The source said traders were pricing Russian oil in U.S. dollars to ensure compliance with the EU "price cap" and seeking equivalent yuan payments.
The source further explained that paying with yuan would expand the supply of Russian oil to India’s state-owned refineries because in Russia, some traders do not accept other currencies.
After the Russian-Ukrainian conflict, the U.S. West imposed sanctions on Russia, but this move accelerated Russia's de-dollarization process, and began to use more and more alternative currencies such as the RMB and the UAE dirham to settle oil trade.
In July last year, Vladimir Chistyukhin, the first vice chairman of the Russian Central Bank, said that the Russian central bank would "make every effort" to ensure that the RMB will continue to be used for settlement and investment in Russia, and promised to explore relevant mechanisms and ways.
Reuters said that in 2023, Indian oil companies used RMB to pay for some Russian oil, but stopped this practice after tensions between China and India. However, private refineries in India continue to use the RMB.
After the Russia-Ukraine conflict broke out, the United States and the West imposed a trading ban on Russian oil trading companies, lowering the Russian crude oil price ceiling, causing Russian oil prices to fall. This has led India, which relies on 90% of imported oil, to significantly increase its purchases of Russian oil to reduce its energy bill.
Reuters said that India has now become the largest importer of discounted Russian seaborne oil. Data shows that Russia has become India's main oil supplier, accounting for about 35% of India's total supply, compared with less than 1% previously.
However, the Trump administration has failed to mediate the Russian-Ukrainian conflict and has begun to look at India, pressuring India to stop buying Russian oil.
U.S. President Donald Trump announced an additional 25% tariff on Indian goods in August, bringing the total tariff level to 50%. The additional tariff measure will come into effect on August 28 local time. Trump said it was to “punish” India’s continued purchase of Russian oil. Trump administration officials have also been putting pressure on India to blame India for its oversea.
Recently, the United States has also tried to jointly act with the G7 and EU countries to demand allies to raise taxes on India.
Faced with Trump's trade pressure, the Indian government took a tough stance and increased its interaction with Russia, China, Brazil and other countries.
On September 21, India’s Ministry of Commerce and Industry, Pius Goyar, reiterated that India will continue to buy oil from Russia unless the United States offers an equivalent price alternative.
He also pointed out that India was wrong to help Russia fight the war, and criticized the double standard of the West: the United States can spend more money to buy oil, the European Union, and India doesn’t have so much money to buy high-priced oil.