An interesting weekend item from Reuters about oil, but also about circumventing trade payments in the dominant USD – helping Russia to de-dollarise its economy.
- Indian refiners have begun paying for most of their Russian oil purchased via Dubai-based traders in United Arab Emirates dirhams instead of U.S. dollars
- India’s top bank, the State Bank of India (SBI), is now clearing these dirham payments, the sources told Reuters
Reuters cite four sources (unnamed) for the information. More detail at that link.
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The background top this is that banks and financial institutions are cautious about clearing payments, not wanting to unintentionally violate the sanctions imposed against Russia after its invasion of Ukraine. The Russian oil price cap has been imposed by the Group of Seven nations and Australia.
Indian (and Chinese) purchases of Russian oil may not be in violation of sanctions, but, exercising an abundance of caution, Indian refiners and dealers are concerned they may not be able to continue to settle trades in dollars. Hence thus of UAE dirhams (code is AED).