breaking news Indian refiners have started paying for Russian oil via Dubai traders in UAE dirhams

An interesting weekend piece from Reuters on oil, but also on bypassing trade payments in the dominant dollar – helping Russia to de-dollarize its economy.

• Indian refiners have started paying for most of their Russian oil purchased through Dubai-based traders in UAE dirhams instead of US dollars
• India’s main bank, the State Bank of India (SBI), now clears these payments in dirhams, the sources told Reuters.

Reuters cites four (unnamed) sources for the information. More details on this link.

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The background is that banks and financial institutions are cautious about clearing payments, not wanting to unwittingly violate sanctions imposed on Russia after its invasion of Ukraine. The Russian oil price cap was imposed by the Group of Seven countries and Australia.

India’s (and China’s) purchases of Russian oil may not be in violation of sanctions, but, treading carefully, Indian refiners and traders fear they may not be able to continue to settle transactions in dollars. Hence therefore United Arab Emirates dirhams (the code is AED).