February 29, 2024

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Indian Oil Minister Hardeep Singh Puri

Indian Oil Minister Hardeep Singh Puri

  • Although oil has recently been settled in yuan and ruble, the importance of the US dollar in this market is here to stay.
  • India’s oil and gas minister said international payment systems had been “in place for a long time” and that displacing the dollar was “not an easy thing”.

Sometimes oil deals are settled in Chinese yuan, Russian rubles or Indian rupees, but the idea of ​​”de-dollarization” – or moving away from the US dollar to settle deals in other currencies – remains far fetched.

“I would like to be able to handle everything in rupees. This is a personal matter [view]Indian Oil and Gas Minister Hardeep Singh Puri told CNBC in an exclusive interview on the sidelines of the Business 20 meeting in New Delhi.

However, the US dollar will remain the preferred currency for transactions in the international oil markets, he told CNBC’s Tanvir Gill.

“I don’t know what kind of change [the dollar needs to] I’m affected but I don’t see it… It’s not that easy.”

Indian refiners have started paying for some Russian oil imports in Chinese yuan, Reuters reports Reuters report in July Citing sources with direct knowledge of the matter.

Russia was cut off from the financial messaging system SWIFT and wide-ranging sanctions imposed in the wake of the Kremlin’s all-out invasion of Ukraine. As a result, Moscow and its clients have had to find alternatives to dollars to settle payments.

The US dollar has long been the main global oil currency, including for India’s purchases.

Reuters also reported that China has shifted to the yuan for most of its energy imports from Russia, which has overtaken Saudi Arabia as the largest energy importer in the world. The largest supplier of crude oil in China In the first quarter of this year.

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“Some refiners pay in other currencies, such as yuan, if banks are not willing to settle trade transactions in dollars,” Reuters said, quoting an Indian government source.

Oil was also settled in Indian rupees. on August 14, Reuters reported The Indian Oil Corporation, the country’s largest oil refiner, paid the United Arab Emirates to buy one million barrels of oil.

This comes after the two countries signed a memorandum of understanding In July to create a framework for promoting local currencies for cross-border transactions.

Indian media reported widely in April that the The Ministry of Foreign Affairs announced that India and Malaysia have begun to settle their trade in Indian rupees.

In light of this, Puri was asked if the Indian rupee could be part of the de-dollarization trend, especially in the oil market?

Not quite, said the oil minister.

I hope the Indian rupee will be the leading currency in the world. But I’m also realistic.

Hardeep Singh Puri

Indian Oil and Gas Minister

“The main point is that… there are arrangements, but the transactions that take place, what percentage of the percentage comes in rupees?”

At the BRICS summit in South Africa, Brazilian leader Luiz Inacio Lula da Silva indicated that the bloc continues to study the possibility of creating a common currency. This may increase our options [a] means of payment and reduce our vulnerabilities,” according to an official translation of the summit.

“Does this mean that the alternative global currency has come?” he asked. Bure asked.

“We’ve heard about disengagement. But these international arrangements, commercial arrangements, payment arrangements, have been in place for a long time,” he added.

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As such, he believes it will be a “long journey” for the Indian rupee to gain some kind of importance in the world like the US dollar.

“I hope the Indian rupee becomes the leading currency in the world. But I’m also a realist,” he told CNBC.

“I mean, if I run a $4 trillion economy and 50% of it is in the offshore sector, I know I only have $2 trillion in international transactions, while the United States and other countries [have more than me]”.