- Payment problems have delayed shipments of Russian Sokol crude oil to the Indian Oil Corporation.
- India prefers to pay in rupees, but Russia is unwilling to use the currency.
- Rosneft's oil-selling unit was unable to open a bank account in the United Arab Emirates to accept payments in dirhams.
Moscow is seeking to replace the use of the US dollar in international trade, but there are barrels of Russian oil stuck at sea due to problems related to paying with alternative currencies.
Shipments of Russian Sokol grade crude oil to the state-owned Indian Oil Corporation were delayed due to payment problems. Reuters Citing two sources familiar with the matter on Tuesday. The seller is the Russian state-owned oil company Rosneft.
The problem arose because the Rosneft unit that sells oil was unable to open a bank account in the United Arab Emirates to receive payments in UAE dirhams, according to Reuters.
This led to a delay in six shipments of Sokol oil that the IPC was supposed to receive from late November to December, Reuters reported, citing shipping data. So most of the shipments remained stuck at sea around India and Sri Lanka.
The IOC and Rosneft immediately responded to requests for comment from Business Insider and Reuters.
It is not immediately clear how much Sokol oil is stuck in the sea due to the propulsion problem.
The problems with paying for Sokol oil highlight issues in dealing with Russia amid sweeping sanctions over its invasion of Ukraine.
India has emerged as a major buyer of Russian oil after a series of Western sanctions against Moscow. This means that dollar trade with Russia is restricted – this is important because the dollar is the currency of choice for international trade.
In order for India to buy Russian oil, it insisted on settling its deals in rupees earlier this year. This is because using the US dollar may expose it to secondary sanctions, and it is also concerned about obtaining the ruble at a fair price on the open market.
However, Indian authorities have controls on the rupee, and the currency is not fully convertible – meaning it cannot be easily changed into another currency.
This poses problems for Russia, which has been stuck with billions of dollars Rs in Indian banks Earlier this year. India encourages spending of the rupee in India itself. the A problem for Russia Is that there is not much that you would like to buy from India.
To circumvent the rupee dilemma and limit currency risks, Russian officials and oil executives instead pressured Indian buyers to pay in Chinese yuan. It is also subject to controls and not fully transferable, but Russia imports a lot from China.
Until now Indian government He feels increasingly uneasy about trading the yuan given the currency conversion fees involved Geopolitical rivalry Between Delhi and Beijing.
Another currency that Russia can use to trade with India is the UAE dirham, but so is the UAE Increase supervision over it From Russian companies.
The Governor of the Russian Central Bank, Elvira Nabiullina, acknowledged the challenges she faces Cross-border payments In a recent interview with local media, he added that the country's economy was being rapidly restructured to deal with international sanctions.
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