According to sources, Indian refiners have begun paying for the majority of their Russian oil purchased through Dubai-based traders in the United Arab Emirates dirhams rather than US dollars.
While India does not recognize Western sanctions against Moscow, and purchases of Russian oil may not violate them in any case, banks and financial institutions are cautious about clearing payments so as not to unwittingly fall foul of the numerous sanctions against Russia.
Indian refiners and traders are concerned that they will no longer be able to settle trades in dollars, especially if the price of Russian crude rises above a December cap imposed by the Group of Seven nations and Australia.
As a result, traders are looking for alternative payment methods, which could help Russia’s efforts to de-dollarize its economy in response to Western sanctions.
Previous attempts by Indian refiners to pay traders for Russian crude in dirhams via Dubai banks failed, forcing them to return to US dollars.
However, India’s top bank, the State Bank of India (SBI), is now clearing these dirham payments, according to sources, revealing details of previously unreported transactions.