Russia's cheap oil supply may be in jeopardy as India looks for payment options.

Since Russia was subjected to sanctions, India has been unable to purchase oil using US dollars. It is claimed to be considering employing rupees and dirhams, both of which have restrictions.
 
Russia's cheap oil supply may be in jeopardy as India looks for payment options.

In New Delhi: Unless creative thinking is applied to find a way to make payments in currencies other than the US dollar, the supply of the relatively inexpensive oil India has been importing from Russia may be threatened in the near future, former diplomats and observers of India-Russia relations have told ThePrint.

According to reports, India imported 1.64 million barrels of Russian oil per day in March 2023, setting a new record. Russia was India's top crude oil supplier for the sixth month in a row and supplied about a third of India's oil imports.

The Indian crude oil basket has been trading at an average price of $83.96 per barrel so far in April. These significant oil imports from Russia have also resulted in significant cost savings for India because of the aggressive bargaining India did with Russia to secure its oil for far less than the $60 per barrel price cap imposed by the US and Europe on Russian oil.

Due to US sanctions on Russia, India is also unable to purchase Russian oil using US dollars, which is the standard form of payment used around the world. With numerous possibilities being considered, including using the Indian rupee to make payments or even depending on the currency of a third country, this has presented issues for Indian policymakers.

While there are rumours and unofficial confirmations that India is using dirhams, the currency of the UAE, to pay for Russian oil, commentators believe that this would be a temporary solution. According to a February report from Reuters, Indian refiners were using dirhams to purchase Russian oil.

ThePrint has attempted to confirm this officially, but to no success. The Department of Financial Services under the Ministries of Finance and Petroleum and Natural Gas should receive all inquiries on the subject, the Ministry of Commerce advised when contacted. Both of these have received numerous calls and emails, but neither has responded.

However, those who pay close attention to India's relations with Russia have confirmed that India does use dirhams to pay Russia, but they have also noted that this arrangement is probably temporary because Russia doesn't require so many dirhams.

ThePrint has attempted to confirm this officially, but to no success. The Department of Financial Services under the Ministries of Finance and Petroleum and Natural Gas should receive all inquiries on the subject, the Ministry of Commerce advised when contacted. Both of these have received numerous calls and emails, but neither has responded.

However, those who pay close attention to India's relations with Russia have confirmed that India does use dirhams to pay Russia, but they have also noted that this arrangement is probably temporary because Russia doesn't require so many dirhams.