India Ditches Dollar for Russian Oil Payments

Indian refiners are actively settling purchases of Russian oil using alternative currencies, a significant departure from dollar-denominated transactions. This shift is driven by a desire to reduce reliance on the US dollar amid heightened geopolitical tensions and evolving US foreign policy.

Transactions are reportedly being facilitated through special overseas rupee accounts, which are then converted into currencies such as the UAE dirham and Chinese yuan. This approach allows Indian banks with limited offshore operations to participate in these trades. The urgency to establish these alternative payment mechanisms is amplified by the impending expiration of India's waiver to purchase Russian oil from the US on April 11.

Indian firms have significantly ramped up their acquisition of Russian crude, purchasing around 60 million barrels since the US initially granted a waiver. This increased volume comes amidst global supply disruptions affecting crude prices. Beyond the dirham and yuan, other currencies like the Singapore dollar and Hong Kong dollar are also being considered, though their adoption depends on individual banking institutions' comfort levels.