India has dramatically increased its purchases of Russian oil over the past year, reaching a new high of 2.2 million barrels per day in June, according to data from the commodities analytics firm Kpler. Russia previously supplied only 2% of India’s oil imports; now it provides 46%. India is the world’s third-largest oil importer.
Over many months Russian and Indian officials have been trying to work out a form of payment in local currencies, based on some sort of ruble-rupee arrangement, but this has not materialized. Russian Foreign Minister Sergey Lavrov even complained publicly that Russia could not keep accepting payment in rupees, since it was accumulating large, unused rupee deposits.
Now, according to a report published by Reuters yesterday, some Indian oil refiners have begun to pay for the Russian oil in Chinese yuan, instead of rupees or dollars. India’s use of the yuan is highly significant, since historic tensions between India and China have thus far interfered with the two countries’ cooperation to find a common approach to the matter of the growing de-dollarization of the world financial system.