A view shows a local oil refinery in Omsk, Russia, June 6, 2022. Picture taken June 6, 2022. REUTERS/Alexey Malgavko

NEW DELHI, July 18 (Reuters) – Russia is demanding payments in UAE dirhams for oil exports to some Indian customers, three sources said and a document showed, while Moscow is moving away from the US dollar to brace itself against the impact of the West to protect sanctions.

Russia has been hit by a string of sanctions from the United States and its allies over its late February invasion of Ukraine, which it describes as a “special military operation.”

A bill viewed by Reuters shows that the bill for delivering oil to a refinery is billed in dollars, while payment is requested in dirhams.

Russian oil major Rosneft (ROSN.MM) is pushing crude into India, which is now the second largest oil buyer after China, through traders like Everest Energy and Coral Energy.

Western sanctions have prompted many oil importers to avoid Moscow, causing spot prices for Russian crude to hit record discounts versus other grades.

This offered Indian refiners, who rarely bought Russian oil due to high freight costs, an opportunity to snag exports of Brent and Middle Eastern staples at heavy discounts.

Moscow overtook Saudi Arabia as India’s second-largest oil supplier after Iraq for the second straight month in June. Continue reading

At least two Indian refiners have already made some payments in dirhams, the sources said, and more will make such payments in the coming days.

The bill showed payments to Gazprombank through Mashreq Bank, its correspondent bank in Dubai.

The UAE, trying to maintain a supposedly neutral position, has not imposed sanctions on Moscow, and the payments could add to the frustration of some in the West, who privately say the UAE’s position is untenable and is siding with Russia. Continue reading .

Trading firms employed by Rosneft started demanding the dollar-equivalent payment in dirhams from this month, the sources said.

Rosneft, Coral Energy and Everest Energy did not respond to Reuters emails seeking comment.

Russia wants to increase its use of non-Western currencies for trade with countries like India, its foreign minister Sergi Lavrov said in April. Continue reading

The country’s finance minister also said last month that Moscow could start buying currencies of “friendly” countries and use such holdings to manipulate the dollar-euro exchange rate to counter sharp ruble gains. Continue reading

The Moscow Exchange is preparing to trade the Uzbek sum and the dirham.

The financial and business center of the Gulf, Dubai has emerged as a haven for Russian wealth.

India, which also maintains a neutral position, recognizes Russian companies’ insurance coverage and has offered classification to ships managed by a Dubai-based subsidiary of Moscow’s leading shipping group to allow trade. Continue reading

India’s central bank last week rolled out a new mechanism for international trade settlements in rupees, which many experts see as a way to boost trade with countries under Western sanctions like Russia and Iran. Continue reading

Reporting by Nidhi Verma; Edited by Kirsten Donovan

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