Russia Hopes for a Savior, Demands India to Buy Oil in RMB

October 7th report: Russian oil traders have started to require Indian state-owned refining companies to pay for Russian oil in RMB.

The report says that India's largest state-owned refining company, Indian Oil Corporation, has already paid for two to three recent batches of Russian crude oil in RMB. The reason Russia prefers the RMB is that it can be directly converted into rubles, while dirhams or dollars eventually need to be converted into RMB through intermediary channels, which is more complicated and costly.

In the past, when India earned money, it spent it locally, not wanting to take any back home. Now, as long as they can receive RMB, they can spend the money at home. So, Russia has found a savior.

Since the outbreak of the Ukraine-Russia conflict, oil trade between Russia and India has been constantly changing its settlement methods. At the beginning of the war, Western sanctions cut off Russia's dollar/euro settlement channels, and Indian buyers once faced payment difficulties.

Subsequently, a temporary solution emerged: Indian buyers transferred the payment to bank accounts in third countries, usually in the UAE, using dirhams for settlement; then Russia would convert the dirhams into rubles through other channels. Although this method avoided the sanction minefield, the process was lengthy, and exchange rate fluctuations also increased transaction costs.

During this time, the RMB gradually appeared in the settlement options, becoming the default intermediary currency for Russia.

Now, Russia is even demanding to skip the intermediate link directly and openly ask for RMB. This not only saves trouble and cost, but also sends a signal: Russia has regarded the RMB as a new financial lifeline.

In Sino-Russian trade, the RMB moving from an option to a requirement is both an expansion of monetary functions and an extension of geopolitical rivalry.

For China, allowing the RMB to enter the international energy trading system is a crucial step toward the "oil RMB".

India's role in this game is also worth pondering. On one hand, India has not joined the sanctions against Russia, accepting discounted Russian crude oil, which not only ensures domestic energy security but also indirectly promotes the deepening of Sino-Russian financial cooperation. On the other hand, although it claims not to rely on the RMB, in practice, it has already accepted this settlement logic.

At the end of the day, where money flows speaks more honestly than diplomatic rhetoric.

Original: www.toutiao.com/article/1845402901176332/

Statement: This article represents the views of the author.