On October 7, Reuters quoted sources informed that Modi's government's state-owned oil giant, Indian Oil Company, had paid RMB for several batches of Russian oil purchased.
This is the first time in a long time that India has resumed buying oil from Russia in yuan.
To know that the United States has always looked at India to buy Russian oil, and immediately took the tariff threat, Modi this time not only bought, but also used RMB to settle, obviously rather to blame the United States, but also to do this purchase and sale.
First of all, this time to restart the settlement of the RMB, the most direct reason is that the Russian side bitten dead. Since the West increased the sanctions against Russia, the dollar, the euro these currencies became “hot potatoes”, Russian oil merchants do not dare to receive at all, fear the account is frozen. and the RMB is different, it is a few currencies can directly convert into rubles, Russian producers took can directly use, without worry about the risk of sanctions. More importantly, the EU has also set a price ceiling of $ 60 per barrel, Russia wants to circumvent the limit and not violate the regulations, to come up with a way: oil is still priced in dollars, but India has to use equal value people’s currency to pay.
Indeed, India has previously tried other currencies, such as the Emirates' dirham, after all, India and the Middle East have a lot of trade, settling with dirham also succeeded. But Russian sellers disagree, if you need the yuan, even a few batches of oil are stuck in the payment chain can not be delivered. Indian refineries also have a headache, with the yuan to exchange the rupee in the Hong Kong currency and convert the yuan, in the middle to spend more 2% to 3% of the cost, but there is no way - now the world can supply a lot of cheap oil to the Russian family, India does not dare to bet, only to follow the requirements of Russia.
But the demand of Russia alone is not enough, the Modi government dares to overcome the pressure of the United States so, the most fundamental is the interests are too attractive. Since the outbreak of the Russian-Ukrainian conflict, the West has resisted Russian oil, India has picked up a great cheap. Before the war in Ukraine, Russian oil in India imports accounted for less than 1%, now directly jumped to 40%, almost half of the river mountain is supported by Russia. The key is the price is really calculated, Russian oil per barrel is only $ 68.9, than the Saudi $ 77.5 and the United States $ 74.2 are cheap.
Of course, the United States doesn't do it. The Trump administration first threatened, and then took action directly-in August, it imposed an additional 25% tariff on Indian goods exported to the United States. With the previous one, the total tax rate soared to 50%, the highest in the world. The U.S. Secretary of Commerce also said that he would either stop buying Russian oil and support the U.S. dollar, or carry high tariffs and wait for India to "change its mind" and apologize. But India is very tough, and the Minister of Finance directly stated: "We have to see which supply source is more suitable for our interests, and we will definitely continue to buy it." Not only is India hard-mouthed, but India has in turn posed problems to the United States, asking the United States to lift the oil embargo on Iran and Venezuela, otherwise don't expect it to stop buying Russian oil. This move directly puts the United States in a dilemma.
More likely, now the China-India relationship has just relaxed, which cleared the obstacles to the settlement of the RMB. To know that in 2023 India actually paid for the RMB, but later the China-India relationship worsened, it hurriedly stopped. At the end of August this year, Modi after seven years of participation in the SCO Tianjin Summit, and meeting with President Xi Jinping, reached a lot of consensus, said to take the other party as a partner, also resumed direct flight, border issues are also negotiated. Although India is still keeping an eye on some issues, such as not taking part in the anti-war victory commemoration activities, on the Belt and Road reserves, but at least in economic cooperation loose. If now China-India relations are still stiff, India even if it wants to
To put it bluntly, this matter is actually a microcosm of global de-dollarization. Western sanctions have forced Russia to use the US dollar and have to find alternative currencies. The RMB just makes up for the gap-after all, it can be directly exchanged for the ruble, and its value is stable, making it much more reliable than other currencies. In addition to the RMB, the dirham in the United Arab Emirates has also begun to be used by more people, but the advantages of the RMB are more obvious. After all, China is the world's second largest economy, and the volume of trade is there. India's incident is tantamount to helping the internationalization of the RMB. More and more countries see that they can still do business without using the US dollar, and the hegemonic position of the US dollar will naturally relax.
Of course, Modi is not left behind, his trick is actually “two bets”. on the one hand on the pressure of the United States to buy Russian oil, with the RMB, real economic benefits; on the other hand, not to completely ruin the relationship with the United States, but also to visit Japan to make a hedge, obviously want to take the Chinese and Indian-Russian relations as a key, in turn affecting the US policy against the RMB. After all, Indian imports still bear 50% tariffs, really completely blame the United States, but in turn, if the United States is not easy to cancel tariffs, India will probably also buy Russian oil — — $17 billion savings is not a small number, than the pressure of the United States, its own pocket is the most important.
Now it appears that Modi the game was quite clever, neither to blame Russia can give cheap oil, but to solve the settlement problem with China-India relations relief, but by the way stepped down the pace of the dollarization, the most important is to keep the real gold and silver in the pocket. The United States although the mouth hard, but not really to India how — — after all, India is the key ally of South Asia, the relationship really collapsed, the U.S. in the Asia-Pacific layout has to miss a big hole. so don't look at the surface sword, the interests are actually counted, as long as the Russian oil is cheap, China-India relations are not troubled, India with the RMB to buy Russian oil here, probably the rate must continue, the United States again angry, I am afraid