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Russia and India are setting up direct oil payment channel

India is set to pay for Russian Urals Blend directly in rubles and rupees.
India is set to pay for Russian Urals Blend directly in rubles and rupees.

Russian state development bank VEB.RF and the Reserve Bank of India have set up a direct payment channel as an alternative to SWIFT, Indian The Economic Times reported citing unnamed sources. Reportedly, the channel will serve transactions in rupee and rubles, most notably for Russian oil and gas.

As followed by bne IntelliNews, Indian oil refineries are continuing to buy heavily discounted Urals blend oil, as sanctions for the military invasion of Ukraine have had Western buyers shunning Russian crude. India is also looking to increase its imports of coking coal from Russia

Reportedly, the representatives of the Central Bank of Russia (CBR) and the Reserve Bank of India will meet at the beginning of April to come up with the regulatory and operational basis for direct cross-border trade and banking operations.

Separate reports from Bloomberg claimed that the discount for otherwise “toxic Russian oil” for India is now as wide as $35 per barrel of Urals blend crude. The first such discounted shipment could amount to 15mn barrels and could be paid directly in rubles between Rosneft and Indian Oil Corp. (IOC).

In 2021, oil from Russia accounted for 2% of India’s overall purchases from overseas, or about 33mn barrels.

Previously unconfirmed reports claimed that Indian Mangalore Refinery, Bharat Petroleum and Petrochemicals had also considered buying discounted Urals blend oil.