Russian Crude Imports Rise, But Rupee-Rouble Plan Stalls

Russia prefers dirham payments as they align with its investments in UAE bonds, real estate

- Rituraj Baruah & Utpal Bhaskar

A rupee-settlement mechanism rolled out in 2022 to ease trade with sanction-hit countries has failed to gain traction with India's largest crude supplier—Russia. Indian refiners continue to source Russian crude supplies through traders based in the United Arab Emirates and settle transactions in dirhams.

Most transactions for crude oil supplies are executed via West Asia-based traders rather than through a direct bilateral payment system between Indian and Russian entities, according to two people familiar with the matter, seeking anonymity.

"There was a payment issue, which has been sorted out now. Payments have been happening in AED (UAE dirham) because Indian state-run refiners are primarily buying it from the traders and most of them are UAE-based," said one of the people cited above. "Also, even if the Russians give their crude oil for sale to a trader, they earmark it for a particular company. This is something specific to them. Also, the discounts on Russian oil have come down."