India’s reluctance to use Chinese yuan to buy Russian oil holding up cargo payments

Two sources said India’s settlement in yuan increases their costs, as rupees first need to be converted to Hong Kong dollars and then yuan

India emerged as the top importer of Russian oil this year, after some western nations suspended imports from Moscow over its invasion of Ukraine

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Oil pump jacks in the Republic of Tatarstan, Russia. India has emerged as the top importer of Russian oil this year, after some western nations suspended imports from Moscow over its invasion of Ukraine. Photo: Reutes

Published: 5:18pm, 16 Oct 2023Updated: 5:20pm, 16 Oct 2023

The Indian government’s discomfort over letting state-controlled refiners pay for Russian oil imports with Chinese currency has held up the payment for at least seven cargoes, people with direct knowledge of the matter said.

The tussle over payment has not disrupted deliveries so far, with Russian firms such as Rosneft continuing to supply state-controlled Indian refiners, who are seeking alternative ways for settlement.

India emerged as the top importer of Russian seaborne oil this year, with refiners snapping up the crude sold at a discount after some western nations suspended imports from Moscow over its invasion of Ukraine.

But refiners often face problems in settling oil trade with Moscow after the United States and European Union imposed a price cap of US$60 a barrel on Russian oil, forcing buyers to use alternatives such as Emirati dirhams for cargoes that have gone above the cap as oil prices have risen.

Reuters reported in July that Indian refiners began using yuan to pay for some oil from Russian sellers, while continuing to use dollars and dirhams to settle most of their Russian oil purchases.

The Indian government, however, has become uncomfortable with using yuan for settlement, two finance ministry officials told Reuters.

And, based on comments from officials at affected refiners, payment for at least seven cargoes is still pending. Some payments for recent cargoes delivered to at least two state refiners have been pending since the last week of September.

India’s reluctance to use Chinese yuan to buy Russian oil holding up cargo payments

Two sources said India’s settlement in yuan increases their costs, as rupees first need to be converted to Hong Kong dollars and then yuan India emerged as the top importer of Russian oil this year, after some western nations suspended imports from Moscow over its invasion of Ukraine

Two sources said India’s settlement in yuan increases their costs, as rupees first need to be converted to Hong Kong dollars and then yuan

India emerged as the top importer of Russian oil this year, after some western nations suspended imports from Moscow over its invasion of Ukraine