In a development that signals deeper shifts in global energy trade, India has reportedly started settling portions of its Russian oil imports using the Chinese yuan. This emerging practice comes as India faces increasing pressure from the U.S. to curtail its reliance on discounted Russian crude. Here’s a fresh, rephrased take on the story—its drivers, diplomacy, risks, and what it means for India’s energy strategy.
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The core of the story: India pays Russian oil in yuan
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Recently, Russia’s Deputy Prime Minister, Alexander Novak, confirmed that India has begun making small payments for shipments of Russian oil in Chinese yuan, although most transactions still occur in roubles.
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Indian state refiners reportedly paid in yuan for two to three cargoes. The shift helps reduce the multi-step conversions otherwise required when dollars or dirhams are used.
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Traders are pushing for more yuan use to streamline transaction costs and skip intermediate currency conversions.
This is part of a broader undercurrent: de-dollarisation in energy trade, especially within the BRICS bloc.
Why India is exploring yuan payments
1. Sanctions and dollar constraints
Western sanctions on Russia have made direct dollar-based oil trades more complex. Countries like India and China are experimenting with alternative currencies to reduce dependence on the dollar.
2. Reducing conversion losses
Using dollars or dirhams typically means converting into yuan or rouble later—a costly and time-consuming step. Direct yuan payments eliminate this extra leg.
3. Geopolitical balance and BRICS strategy
BRICS nations have been exploring ways to reduce dollar dominance in global trade. India’s move aligns subtly with that broader shift.
U.S. pressure and Trump’s declaration
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Former U.S. President Donald Trump claimed that Indian Prime Minister Narendra Modi had assured him that India would soon stop buying Russian oil. India, meanwhile, denied such assurances.
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The U.S. is actively pushing Asian countries—especially India, China, and Japan—to reduce Russian energy imports starting December. White House officials stated that India is cutting Russian oil imports by 50%, though Indian sources say no visible reduction has yet manifested.
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Despite claims, India continues to import large volumes of Russian oil. As of September 2025, Russia remains the single largest source of India’s crude imports.
Strategic and economic implications
Energy security vs. diplomatic pressure
India depends heavily on crude imports—over 80% of its demand. The ability to source discounted Russian oil alleviates major import cost pressure.
But pressure from Washington and alliances may push India to diversify further.
Currency risk and market adoption
Though yuan payments are growing, they remain a small share. Most oil deals still use roubles (as Russia prefers) or the dollar for pricing compliance with EU rules.
Wider adoption hinges on trust, conversion infrastructure, and geopolitical commitments.
Signalling to global markets
By using yuan—even partially—India is sending a message: it retains flexibility in how it trades energy. This could reshape how trade partners view bilateral deals and payment norms.
What’s ahead—watch for these developments
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Will India scale up yuan payments or revert to more conventional systems?
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How will the U.S. respond with sanctions, tariffs, or diplomatic pressure?
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Can yuan use for oil trade gain traction globally?
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Will India diversify more quickly into U.S. energy imports or other oil sources?
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How will Russia react if more buyers shift away from the dollar model?
Conclusion
India’s shift toward partially settling Russian oil payments in Chinese yuan marks a subtle but meaningful realignment in energy diplomacy. While still in early stages, the move underscores how geopolitical pressures—in particular U.S. demands—and sanctions are reshaping trade flows. For India, it’s a strategic bet: balancing energy security, currency risks, and foreign policy narratives across major powers.
As the story unfolds, the world will watch whether this experiment in de-dollarisation gains momentum—or if global pressure forces a rollback.
