The U.S. sanctions pressed against Russia are helping India and other developing countries to purchase crude oil at discounted prices. The Biden administration sanctioned Russia for invading and waging war against its neighboring country Ukraine. The sanctions stop other countries from conducting business with Russia in a move to disable its local economy. Other countries are not allowed to settle payments with Russia using the U.S. dollar for cross-border transactions. The recent oil deal was carried out between Russia, China, and India, which are part of the BRICS alliance.
Also Read: BRICS: 130 Countries Move Towards CBDC Currency, US Dollar in Jeopardy
However, despite the sanctions, Russia is laundering crude oil to China and Saudi Arabia by accepting the Chinese Yuan as payment. Saudi Arabia and China are laundering Russian crude oil to other countries at discounted prices due to the sanctions. The reliance on the U.S. dollar is eliminated in these transactions making it cheaper for other nations to procure oil.
BRICS: India Saves $7 Billion By Not Paying in the US Dollar For Oil Trade
India is making use of the U.S. sanctions against Russia by aggressively purchasing crude oil at lesser prices. Since February 2022, India purchased $186.45 billion worth of crude oil from Russian suppliers through laundered oil from China.
Also Read: BRICS: India Might Back Out From Launching The New Currency
India has saved $7.37 billion through these transactions, as paying in the U.S. dollar could have cost $193.82 billion. In addition, the $7.37 billion was saved by India through foreign exchanges in 14 months.
The crude oil transactions were settled with China by using the Chinese Yuan and not the U.S. dollar. Indian refiners including the Indian Oil Corp (IOC) settled payments for oil with the Chinese Yuan. The crude oil was procured from Russia as India isn’t allowed to initiate business with the country due to U.S. sanctions.
Also Read: 8 Financial Sectors To Be Affected if BRICS Launch New Currency
Also, the Putin-led government is finding alternate ways to conduct business with global partners without depending on the U.S. dollar. The BRICS group is helping the Russian economy to sustain itself by conducting business with the Chinese Yuan.