Traders selling Russian oil are asking India’s state-run refiners to settle payments in Chinese yuan, taking advantage of warmer ties between New Delhi and Beijing to streamline transactions, according to trade sources.
Reuters with the news.
India’s biggest refiner, Indian Oil Corp (IOC), has recently paid in yuan for two to three Russian oil cargoes, sources familiar with the matter said. The move marks a shift from 2023, when state refiners halted yuan payments amid government unease during a period of strained relations with China, even as private refiners continued to use the currency.
Western sanctions on Moscow following its 2022 invasion of Ukraine have pushed oil traders to use alternatives like the yuan and UAE dirham instead of the U.S. dollar. Since only yuan can be directly converted into roubles, traders previously had to route payments through dirhams or dollars first — a costly extra step they now seek to eliminate.
Traders are reportedly pricing Russian oil in U.S. dollars to comply with the EU price cap while accepting equivalent yuan settlements. Paying in yuan, they say, will widen access to Russian crude for Indian state refiners, as some suppliers prefer not to accept other currencies.
The renewed use of the Chinese currency also follows signs of thawing India-China relations, including the resumption of direct flights after five years and Prime Minister Narendra Modi’s recent visit to China for the Shanghai Cooperation Organisation summit.
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Some interesting implications from this:
- The increased use of yuan in India’s oil trade strengthens China’s currency in global energy markets while reducing dollar demand
- Yuan settlements could boost Russian oil flows to India by easing payment bottlenecks under Western sanctions
- The shift underscores closer India-China engagement and rising multipolarity in global trade settlements.
