Indian Refineries Shift to Yuan for Russian Oil Payments
Indian refineries are shifting their payments for Russian oil to Chinese yuan, a move that could expand purchasing options and contribute to the 'de-dollarization' of global energy trade. This change comes in response to financial restrictions on Russia and the insistence of international suppliers.
The shift began with private Indian refineries using yuan in transactions, and now state-owned enterprises are following suit under pressure from sellers. The use of yuan helps eliminate intermediate currency conversion steps, minimizing losses and speeding up fund transfers to Russian suppliers. This move also strengthens China's position in international settlements and shifts financial influence towards Asia.
Companies continue to quote oil prices in US dollars to comply with the European Union's price cap, but final payment is made in yuan at the current exchange rate. Several Indian state-owned refineries, including Indian Oil Corporation (IOC), have made their first transactions in yuan for Russian oil. This is a significant development, as attempts to use yuan for payments in 2023 were halted due to political disagreements between Delhi and Beijing.
The shift to Chinese yuan for Russian oil payments is a response to Western sanctions and a desire to expand purchasing options. While the 'masterminds' behind this move remain unidentified, its impact on global energy trade and currency dynamics is clear. Indian refineries are adapting to the demands of international suppliers, potentially paving the way for further changes in energy trade dynamics.
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