Top Indian refiners are moving away from the US dollar in favor of the UAE’s dirham, sources told Bloomberg. Reliance Industries, Bharat Petroleum Corp, and Nayara Energy are shifting currencies to buy Russian crude oil. “If you are asking me officially am I in the know of these payment channels, no, I’m not,” India’s oil minister told Bloomberg. Loading Something is loading.
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Large Indian refiners are shifting away from the US dollar in order to purchase Russian crude, sources told Bloomberg.
Companies including Reliance Industries, Bharat Petroleum, and Nayara Energy are instead starting to use UAE’s dirham, which is pegged to the US dollar.
“If you are asking me officially am I in the know of these payment channels, no, I’m not,” Indian oil minister Hardeep Singh Puri told Bloomberg. Still, India is open to discussing the issue with other countries, he added.
The currency the Indian refiners use varies from cargo to cargo, depending on traders’ preferences, according to Bloomberg.
Still, it marks another setback for the dollar’s dominance, as greenbacks are the most widely used currency worldwide to conduct trade, especially for commodities like oil.
Since Russia’s invasion of Ukraine last February, Moscow has been cut off from the dollar and euro in international trade, forcing it to turn to alternatives like China’s yuan.
Meanwhile, the European Union’s ban on seaborne Russian oil imports has turned the Indian market into a premier customer base for the Kremlin. Russia has been the premier crude supplier to India since June, and buyers are able to shore up supplies at a steep discount in light of the price cap on Moscow’s crude and sanctions.
Using the dollar-pegged dirham gives both Russia and India a relatively secure and stable to complete transactions while avoiding potential obstacles when using the US dollar. Still, most oil deals are still denominated in greenbacks.
But the ever-closer relationship being between the UAE and Russia is already drawing some criticism from the US, with a top sanctions official at the US Treasury voicing concern over the close financial ties on a recent trip to Abu Dhabi.
Other attempts to erode the dollar’s dominance have also emerged recently, including Russia and China opening talks last year to develop a new reserve currency with other BRICS countries as well as an effort by Russia and Iran to create a cryptocurrency backed by gold.