Russia faced problems receiving payment for oil supply to India in Emirati dirhams. This has forced India's largest oil refiner to buy more oil from the Middle East.
What problems did Russia face with the oil supply to India
As noted by the publication, deliveries of Russian "Sokol" oil to Indian Oil Corp ( IOC.NS ) are delayed due to payment problems, forcing India's largest refiner to use its reserves and buy more oil in the Middle East.
IOC is the only state-owned oil refinery that has an annual agreement to purchase various Russian grades of oil, including "Sokol" from the Russian oil company Rosneft, media reports.
According to sources, "Sokol" oil is supplied to IOC by "Sakhalin-1" LLC, which is part of "Rosneft".
India's state-owned refiners pay Russia in UAE dirhams after the government advised them to stop using the Chinese yuan. However, private refiners still pay in yuan because there is no alternative.
Payments to the IOC for oil from the Sokol field were complicated by the fact that Sakhalin-1 LLC was unable to open a bank account in the UAE to accept payments in dirhams.
By the way, India has become the largest buyer of Russian marine oil after the retreat of European customers due to the full-scale invasion of Ukraine by Russia last year.
What is known about the export of Russian oil
Income from oil exports is the basis for the Russian budget and allows it to support Moscow's military economy.
The EU has banned the import of crude oil delivered by sea and refined petroleum products from Russia. The consequences of the ban on oil for Russia are significant. About half of its total oil exports went to the EU.
In 2021, the EU imported 71 billion euros worth of crude oil (€48 billion) and refined products (€23 billion) from Russia. The loss of this leading profitable market significantly impacts Russia, whose budget is heavily dependent on oil revenues.
Meanwhile, the Indian route, one of Russia's most profitable oil trade routes since the imposition of Western sanctions, faces a significant challenge due to non-dollar payment problems and no short-term solution.
