India’s oil imports from Russia

July 21, 2023 - India is continuing its record-breaking run, having bought more discounted Russian crude oil for the ninth straight month, with refiners starting to purchase Russian crude using Chinese yuan.

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In June, Indian Oil Corp. (IOC) used Mumbai’s ICICI Bank to pay in yuan for Russian oil from Rosneft, Reuters reported.

Two of India’s private refiners -- Bharat Petroleum Corp. and Hindustan Petroleum Corp. -- are considering paying for Russian imports in yuan. However, executives said they aren’t aware of any payments in the Chinese currency.

International oil transactions use the U.S. dollar. However, since Moscow is not allowed to deal in dollars and euros as part of the international sanctions for its invasion of Ukraine, the yuan has increasingly become an alternative for the country for settling payments.

“There is a huge risk in using yuan as an international currency as it is heavily controlled by the Chinese government,” said Madan Sabnavis, chief economist of the Gujarat-based Bank of Baroda.

”But the world will move towards diversification of currency for international trade and may not only depend on the U.S. dollar in the days to come,” said Sabnavis.

India’s oil imports from Russia hit a record 2.17 million barrels a day in June, exceeding the combined shipments from Saudi Arabia and Iraq -- 1.59 million barrels a day -- according to data from Kpler, an analytics company.

India is making about 10 per cent of its payments for Russian oil in the Chinese yuan, with the rest in Indian rupees and UAE dirhams.