India has started settling some payments for Russian oil in Chinese yuan, though the percentage remains small, according to Russia's Deputy Prime Minister Alexander Novak. The majority of transactions are still conducted in roubles.
"I am aware that such payments have started. I believe the percentage is small at present because payments are largely made in roubles," Novak told the state-run TASS news agency on Wednesday.
India, the world's third-largest oil consumer, has increased its imports from Russia following the February 2022 invasion of Ukraine. Western sanctions imposed on Russia have led to the increased use of alternative currencies like the yuan and the UAE dirham for oil trades, which have historically been dominated by the dollar.
In September, India spent 2.5 billion euro on Russian crude oil. This figure represents a 14% decrease compared to the previous month, according to a European think tank.
Prior to the increase in Russian oil imports, India primarily relied on Middle Eastern oil. However, Western sanctions and reduced demand in Europe made Russian oil available at discounted prices. As a result, Russian crude oil imports to India surged from under 1% to nearly 40% of its total crude oil imports within a short period.
According to the Centre for Research on Energy and Clean Air (CREA), India was the second-largest buyer of Russian crude oil in September, following China. Earlier reports indicated that India had primarily been paying for Russian oil in rupees.
The shift towards using the yuan is a notable development, even if the current volume is small. Previously, ThePrint reported that India was using Chinese yuan to pay for approximately 10% of its Russian oil imports, with the remaining payments made in Indian rupees and UAE dirhams. Russia has indicated a preference for receiving some payments in yuan due to its greater usability for them compared to rupees.
Data from the Ministry of Commerce and Industry indicates a significant increase in India's imports of Russian oil in 2022-23. Imports jumped from $2.47 billion in 2021-22 to $31.12 billion in 2022-23, representing an increase of over 1,100% in a single year. Consequently, Russia's share of India's overall oil imports rose to 19.1% in 2022-23, up from just 2% in the previous year.
