Indian companies are still buying Russian oil in USD

NEW DELHI: Indian companies are still buying Russian oil used dollars after Dubai’s Mashreq Bank refused to process payments from at least two oil refineries in Dirhams of the emirates at the supplier’s request, according to three sources familiar with the matter.
Russia has been hit by sanctions from the United States and its allies following its invasion of Ukraine, and Moscow has asked some buyers of its goods to pay in rubles or currencies other than the dollar. dollars and euros on which their contracts are usually priced.
Traders supplying Russia with oil in July asked at least two Indian companies to settle in dirham. An invoice from one of the refineries seen by Reuters showed oil payments in dollars while asking for payment in dirhams.
The invoice shows that payments will be made to Gazprombank through Mashreq Bank, its correspondent bank in Dubai. Mashreq has a branch in New York, according to its website.
Three sources said the dirham payments were unsuccessful because Mashreq refused to facilitate the transaction. Reuters could not determine why.
The US Treasury Department, Mashreq Bank and Gazprombank did not immediately respond to requests for comment.
One of the sources said that the payments were eventually processed by the Abu Dhabi branch of the State Bank of India and paid in US dollars.
The State Bank of India did not respond to a Reuters email seeking comment.
The United Arab Emirates and India have avoided strong criticism of Russia’s actions in Ukraine, which Moscow calls a “special military operation”, and have not imposed sanctions. .
India’s central bank recently set up a mechanism to facilitate international trade in rupees, a move seen as aiding its business relationship with Russia in the event of severe sanctions. stricter Western restrictions on Moscow.
The new rules largely reflect the barter-like system used with Iran when the country was under sanctions, in which Indian importers deposit payments in rupees to banks’ “vostro” accounts. Tehran’s trade with India’s UCO bank, a state-run lender.
A vostro account is an account held by a domestic correspondent bank on behalf of a foreign bank.
Iran used this money to pay for the import of unsanctioned goods from India.
UCO Bank has received approval from India’s central bank to open a special rupee account for Russia’s Gazprombank, and Soma chief executive Sankara Prasad told Reuters it hopes to do so soon. so.
To pay under the new mechanism, importers and exporters must agree to invoice in rupees and settle terms of exchange rates.
To make trading in local currency more attractive, India has also allowed foreign banks to invest excess funds in government securities as special rupee accounts have no interest on foreign currency. to send.
According to government data, India’s imports from Russia reached $17.24 billion in April-August this financial year from about $3.2 billion a year earlier due to a sharp increase in oil purchases.
Western sanctions have alienated many oil importers from Moscow, pushing Russian spot oil prices to record lows relative to other oils.
That gives Indian refiners, which rarely buy Russian oil due to high transportation costs, a chance to earn exports at huge discounts to Chinese staples. East and Brent.

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