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India Expected To Reject Russian Demand To Pay For Oil In Chinese Yuan

India’s government is expected to reject demands from Russian oil companies to pay for Russia’s crude oil imports in Chinese yuan, Indian officials told Bloomberg on Friday.

Russia and its companies need Chinese currency as Russian trade has become much more reliant on China after Putin’s invasion of Ukraine and the sanctions on Russia. Moscow has a lot of Indian rupees, but it can’t spend them all while it needs yuan. Russian firms have largely ditched dollar and euro payments due to the Western sanctions and the fact that Russia has been cut off from the SWIFT banking payment system.

Russian oil companies have been asking lately for payments in yuan, but the Indian government – which owns 70% of the refiners in the world’s third-largest crude oil importer – will not agree to these demands, according to Bloomberg’s sources.

Some crude cargoes from Russia to India have been recently delayed because the parties have failed to agree on the currency of the payment, sources at refiners told Bloomberg.

Earlier this week, unnamed Finance Ministry sources told Reuters that payment in Chinese currency of seven cargoes of Russian crude oil imported by state-run Indian oil refineries is being held up over the Indian government’s new-found hesitancy to accept this form of payment.

State-run Indian Oil Corporation has settled purchases in yuan previously, while Bharat Petroleum Corp and Hindustan Petroleum have not yet resorted to the Chinese currency, though direct Russian suppliers have requested this. 

India has hiked imports of Russian crude in the past year due to the cheaper Russian supply compared to crudes from the Middle East.

Between April and September, the first half of India’s 2023/2024 fiscal year, Indian imports of Russian crude oil more than doubled to 1.76 million barrels per day (bpd) from 780,000 bpd in the same period of the 2022/2023 year, per vessel-tracking data cited by Reuters.

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OPEC had a record-low share of India’s oil imports between April and September, as the world’s third-largest crude importer more than doubled purchases of Russian crude, according to industry and trade data compiled by Reuters.

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on October 20 2023 said:
    As a rule of thumb, the seller decides which currency he wants to be paid for his merchandise. If the buyer doesn’t agree, he can shop somewhere else.

    India is coming under a huge pressure from the United States not to accept the petro-yuan in payment for its Russian crude oil imports as Russia is demanding.

    It is India’s choice but if it decides to buy crude oil from other sources it will cost it more since it will lose the discount Russia offers it.

    Like European countries who initially refused to pay rubles for their Russian oil and gas and were forced to do so at the end, India will eventually accept payment in petro-yuan.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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