Indian state refiners have restarted payments in Chinese yuan for discounted Russian crude oil imports after a two-year pause, trade sources said. The shift comes amid thawing ties between New Delhi and Beijing.
The resumption highlights a push toward de-dollarization in global energy markets. It helps Indian buyers secure cheaper oil while aiding Russian sellers to bypass Western sanctions. State-run Indian Oil Corp led the move by settling recent deals in yuan. Private refiners never stopped using the currency. The change affects India’s top supplier of seaborne crude, which now meets about 40% of the nation’s oil needs.
State Refiners Restart Yuan Deals After China Thaw
Indian Oil Corp completed yuan payments for two to three cargoes of Russian oil this month, sources close to the deals told Reuters. Traders pricing the oil in dollars to meet the European Union’s $60-per-barrel cap then requested equivalent yuan transfers. This avoids extra steps to convert dirhams or dollars into yuan for ruble payouts to producers.
The practice paused for state firms in late 2023. Then, the Indian government voiced concerns over yuan use during border disputes with China. At least seven cargoes saw delayed payments as a result. Private buyers like Reliance Industries kept paying in yuan without issue.
Recent diplomacy changed that. Prime Minister Narendra Modi visited China in September 2025 for a Shanghai Cooperation Organisation summit. There, he and President Xi Jinping called their nations partners, not rivals. Direct flights between the countries resume by late October 2025 after a five-year gap.
Petroleum Minister Hardeep Singh Puri has defended Russian imports overall. In July 2025, he said India diversified sources and faced no sanctions on the crude. “We are not unduly worried,” Puri told reporters when asked about U.S. tariff risks.
Discounts Save India $17 Billion Since 2022
Russian oil has cushioned Indian households from higher fuel prices. Refiners saved at least $17 billion from April 2022 to June 2025, per Ministry of Commerce trade data. Discounts averaged 13.6% in fiscal 2022-23, falling to 2.8% in 2024-25 as global prices stabilized.
Those gains stemmed from steep cuts offered after Russia’s 2022 Ukraine invasion. Imports surged from less than 1% of India’s needs to over a third. Without them, analysts say, the oil bill could have jumped another $58 billion at $10-per-barrel higher rates.
U.S. officials link the buys to trade friction. In August 2025, sources said Washington threatened 50% tariffs on $86 billion in Indian exports unless purchases eased. New Delhi plans to keep importing, prioritizing energy security. Critics in the U.S. argue the deals let Indian firms resell refined products at profit, denting dollar dominance.
Supporters counter that the trades stabilized global prices. Russian supplies kept crude from spiking $17 to $20 per barrel yearly, per Nomura economists cited in reports.
Yuan use fits broader trends. Russia leans on the currency for 90% of its China oil sales. For India, it cuts costs and widens supplier options. Some traders shun dirhams, sources said.
