The Reserve Bank of India has requested the nation’s principal state-owned refiners to accept rupees for crude, starting the process of de-dollarization with Gulf exporters.
It seems that India is now seeking a similar agreement with Gulf crude exporters, four months after its government rejected efforts from Russian oil corporations to pay for Russia’s crude supplies in Chinese yuan.
According to three executives at the processors, the Reserve Bank of India (RBI) has requested that the nation’s principal state-owned refiners pressure Persian Gulf suppliers to take at least 10% of oil payments in rupees for the upcoming fiscal year.
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As has been the general trend over the last two years, the RBI is worried that the country’s skyrocketing energy demand may weaken the rupee (India refiners must sell Rupees to buy dollars to settle the payments for their increasing heavy demand for crude).
According to the CEOs Bloomberg spoke with, India hopes to take advantage of the increase in demand by pushing its currency in foreign trade and reducing its reliance on dollars.
The executives stated that although the three refiners—Indian Oil Corp., Bharat Petroleum Corp., and Hindustan Petroleum Corp.—have already contacted oil exporters about the issue, the suppliers are resisting because of conversion fees and currency risk.
Global oil transactions are primarily conducted in US dollars, while China has made considerable progress in leveraging the yuan to cover import costs.
In August of last year, Indian Oil sent one million barrels of crude oil to Abu Dhabi National Oil Co. in exchange for rupees.
But since then, there haven’t been any exchanges of the currency.
The nation’s refiners have also paid for Russian oil in other currencies, such as UAE dirhams.
India made this move in the days following a report by the Russian news agency TASS stating that the five countries that make up the BRICS (Brazil, Russia, India, China, and South Africa) would collaborate to develop a blockchain-based digital payment system.
“We believe that creating an independent BRICS payment system is an important goal for the future, which would be based on state-of-the-art tools such as digital technologies and blockchain. The main thing is to make sure it is convenient for governments, common people and businesses, as well as cost-effective and free of politics,” Kremlin aide Yury Ushakov said in an interview with TASS.
The endeavor is a component of a special goal for this year to strengthen the position of the BRICS in the global monetary system, as CoinDesk reported.
The BRICS group has been working toward “de-dollarization,” or less reliance on US currencies for settlement, for a while now.
“Work will continue to develop the Contingent Reserve Arrangement, primarily regarding the use of currencies different from the US dollar,” Ushakov said.
India, the third-biggest importer of crude oil in the world, is expected to spearhead the increase in global demand this decade.
