Russia is seeking payment in the United Arab Emirates (UAE) dirhams for oil exports to certain Indian conglomerates, as Moscow moves away from the US dollar to insulate itself from the effects of Western sanctions, sources said.
The United States and its allies have imposed several sanctions on Russia due to its invasion of Ukraine in late February, which Moscow refers to as a "special military operation."
An invoice obtained by Reuters shows that payment for the oil supply to one refiner is asked in dirhams, but the cost is computed in dollars.
Russia's largest oil producer, Rosneft, is supplying crude to India, its second-largest oil customer after China, through trading companies like Everest Energy and Coral Energy. Many oil importers have avoided Moscow due to Western sanctions, driving down spot prices for Russian crude relative to other grades to record lows.
Due to high freight costs, Indian refiners, which rarely purchased Russian oil, now had the chance to purchase exports at significant discounts to Brent and Middle Eastern commodities. For the second consecutive month in June, Moscow overtook Saudi Arabia as the second-largest oil exporter to India after Iraq.
At least two Indian refiners have already cleared some payments in dirhams, and more are expected to do so in the upcoming days, source said. Payments were to be transferred to Gazprombank through Mashreq Bank, its correspondent bank in Dubai.
The United Arab Emirates has not placed sanctions on Moscow in an effort to maintain what it claims is a neutral position, and the payments may only aggravate some Westerners who privately believe that the UAE is taking a pro-Russian attitude. The sources said that beginning of this month, the trading companies Rosneft uses have begun demanding the dirham equivalent of the payment made in dollars.
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