Russian export firms selling energy resources to Asian markets have run into funding hurdles when dealing with Indian buyers. The root cause lies in the nuances of India’s financial regulations, which make it extremely difficult to move rupees out of the country after a sale, according to industry analysts cited by Novye Izvestia. This constraint complicates the cash realization of international deals and shapes how traders price and settle Russian energy shipments in South Asia.
Even as India and China emerged as key buyers for Russia after 2022, India at times surpassed China in the volume of Russian energy it imported. Yet the preference in many transactions is to price and settle in Indian rupees, the publication notes, rather than in hard currency. This currency choice adds another layer of friction for Russian exporters seeking liquidity and cross-border settlement flexibility in the broader Eurasian energy trade.
Experts interviewed for the report describe a persistent trade imbalance between Russia and India, driven in part by India’s insistence on rupee-denominated settlements. Igor Lipsits, a Doctor of Economics, points out that exporters struggle to withdraw rupees from Indian banks, which constrains post-sale cash flow and capital efficiency for Russian suppliers. The issue underscores how currency, not just price, can shape trade dynamics and investment incentives between the two nations.
Aleksey Gromov, who leads energy analysis at the Institute of Energy and Finance, highlights a parallel challenge with the yuan as well. He explains that while Russian oil can be sold for yuan, converting those funds into usable cash for corporate needs often proves difficult. The broader takeaway is that Indian financial regulation imposes withdrawal and conversion obligations that complicate the liquidity profile of Russian energy sales, limiting the ease with which foreign exporters can repatriate funds through Indian financial channels.
The situation is further complicated by regulatory constraints that affect cross-border currency movements. Market participants must navigate rules that govern how foreign firms access bank accounts in India and how quickly proceeds from energy exports can be repatriated. These frictions influence how deals are structured, including which currencies are favored for pricing, invoicing, and settlement, and they shape the risk landscape for both buyers and sellers in the energy corridor that links Russia with South Asia. In light of these constraints, traders and policymakers alike have been watching how currency arrangements interact with broader sanctions, payment rails, and bilateral financial cooperation in the region, aiming to improve liquidity while preserving financial stability for all parties involved.
Bloomberg noted on March 9 that as Asian buyers increase, the price dynamics for Russian oil shift. ESPO crude traded roughly $6.5 to $7 below the North Sea benchmark, while Ural crude was about $10 under the Brent benchmark. Despite the discount, current pricing still reflects a premium of about $2 relative to February 2023, highlighting how currency and regulatory factors can intersect with global oil pricing structures in ways that matter for margins and financial planning. These price differentials illustrate that currency settlement choices, regulatory frictions, and regional demand are all part of the broader picture shaping the flow of Russian energy to Asian markets, and they remain a focal point for investors and policymakers in North America as they assess supply routes, pricing risk, and the reliability of international energy trade networks (Bloomberg).