Russian crude exporters urge Indian refiners to settle payments in yuan

Highlights:

• Russian oil traders are now asking Indian refiners, including Indian Oil Corporation (ASX: IOC), to settle crude payments in Chinese yuan instead of U.S. dollars or dirhams.
• The move aims to bypass Western sanctions and streamline currency conversion for Russian exporters.
• India, one of the largest buyers of Russian seaborne crude, faces a delicate balance between energy security and currency risks as trade settlements shift away from the dollar.

At the time of writing, Russian crude oil exporters have started urging Indian state-run refiners — including Indian Oil Corporation (ASX: IOC) — to settle payments in Chinese yuan rather than the traditional U.S. dollar or UAE dirham. The development signals a shift in global oil trade settlements as sanctions continue to restrict Russia’s access to conventional payment systems.

Why the Shift to Yuan?

With Western sanctions limiting Russia’s ability to conduct dollar transactions, Moscow is increasingly seeking payment alternatives that allow smoother financial settlements. Requesting yuan payments helps Russian suppliers eliminate the need to convert currencies multiple times before receiving funds in rubles. For Indian refiners, using the yuan could simplify payment processing and help secure discounted crude. However, the underlying contracts reportedly remain indexed to the U.S. dollar to comply with international pricing mechanisms.

Some Russian sellers are reportedly declining payments in other currencies, effectively making yuan the only acceptable option. India’s state-owned refiners had experimented with yuan payments in the past but temporarily suspended them amid political sensitivities. The renewed push suggests both sides are now more willing to revisit that approach.

Market and Geopolitical Implications

The growing preference for yuan payments highlights a broader trend of de-dollarisation in global commodity markets. It reflects an ongoing shift in trade dynamics, where countries are exploring alternative settlement currencies to reduce dependence on the dollar. India, one of the largest importers of Russian seaborne crude, must now navigate between maintaining energy security and managing currency exposure risks. While the yuan option may offer smoother trade flows, exchange-rate volatility and geopolitical tensions could still pose significant challenges in the months ahead.

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