Western sanctions against Russian oil create more and more problems for Kremlin, - Reuters
One of the most lucrative routes for trading Russian oil, Asia, has been facing serious challenges since the introduction of Western sanctions over the Russian invasion of Ukraine.
As Reuters notes,they are related to the disadvantages of payment in a currency other than the dollar, Censor.NET informs with reference to ZN.ua.
There is no short-term solution on the horizon - attempts to find an alternative to the dollar have run into conversion difficulties, as well as political obstacles.
The problems were exacerbated when India, which has become the largest buyer of Russian seaborne oil, insisted on payment in rupees in July, and trade activity nearly collapsed, according to three sources familiar with the matter.
The sources, who wished to remain anonymous, said that Russian oil suppliers cannot conclude transactions in Indian rupees due to unofficial instructions from the Russian central bank - it will not accept the currency. According to another source, Russia has limited ability to spend rupees, as its imports from India are insignificant.
Around mid-August, at least two major Russian oil companies threatened to divert about a dozen tankers (up to a million tons of oil) bound for India to other destinations, Reuters sources said. As a temporary solution to the conflict over the Indian deals, the cargoes were paid for in a combination of the Chinese yuan, the Hong Kong dollar as a transitional currency to the yuan, and the UAE dirham, which is pegged to the US dollar, ten trade sources and officials said.
However, the challenge of finding a viable alternative to the dollar remains, and these problems affect buyers in Africa, China and Turkey, which have become the largest buyers of Russian oil.
The biggest problem, however, concerns India, which buys more than 60% of Russian oil shipped by sea.
The problems are likely to worsen as trade controls tighten. In recent weeks, Washington has imposed the first sanctions on owners of tankers carrying Russian oil at a price higher than the western upper limit, marking the first application of the ceiling since it was introduced late last year.
Doing business in rupees is particularly challenging for Russia. India encourages spending rupees on its territory and has introduced penalty exchange rates for converting rupees into other currencies, which two Russian sources say are more than 10% of the amount convertible.
The situation could be alleviated if Russia imported more goods from India, which could be paid for in rupees. Instead, India imports more from Russia, while Russia is the main importer of cars, equipment, and other goods from China.
According to data posted on the website of the Indian Ministry of Commerce, India's imports from Russia reached $30.4 billion in April-September, and the trade deficit with Moscow widened to $28.4 billion, up from about $17 billion in the same period last year.
