Traders dealing in Russian oil have begun demanding that Indian state-owned companies pay for supplies in Chinese yuan.

Source : Reuters

Details : They see this move as a way to simplify transactions amid improving relations between India and China.

According to sources, Indian Oil Corporation (IOC), India's largest state-owned oil refining company, recently paid for two or three shipments of Russian oil in yuan.

After Western sanctions were imposed on Moscow in 2022 following its full-scale invasion of Ukraine, alternative currencies – including the Chinese yuan and the UAE dirham – began to be used more widely in oil trading instead of the US dollar.

In 2023, Indian state-owned companies partially made payments in yuan but later stopped due to the government's negative reaction amid tense relations with Beijing. Private companies, however, continued using the Chinese currency.

Now, traders want to remove an extra step in the payment process. Previously, they had to convert dollars or dirhams into yuan and then into Russian roubles, which increased costs.

Sources noted that suppliers set prices in dollars to comply with the EU's price cap on Russian oil but demand equivalent payments in yuan.

India has become the largest buyer of Russian seaborne oil after Western countries halted imports due to sanctions. Analysts believe that using the yuan will expand Indian state companies' access to Russian oil as not all traders are willing to accept payments in other currencies.

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