India breaks dollar dominance: UAE dirham and yuan enter the oil game

Indian oil refiners are settling their purchases of Russian oil in currencies that are alternative to the dollar, in a bid to reduce their dependence on the US currency amid geopolitical tensions, with payments being made by depositing the rupee into offshore accounts of Russian sellers, before converting it into UAE dirhams or Chinese yuan, Bloomberg reported.

Indian refiners continue to buy Russian oil after the United States granted a temporary waiver for seaborne crude until April 11 , to mitigate the effects of supply shortages caused by the closure of the Strait of Hormuz due to the U.S.- Israel war on Iran, at a time when companies are considering using additional currencies such as the Singapore dollar and the Hong Kong dollar.

In the same context, Deutsche Bank  said that the repercussions of the US-Israel war on Iran are likely to push the yuan towards the expansion of the yuan's use in oil trade, which could weaken the petrodollar system.  Strategist Malika Sakhdeva noted that the conflict could accelerate the emergence of petroyuan, especially with reports that Iran is requiring oil payments to be made in yuan for ships passing through the Strait of Hormuz.

The bank believes that the decline in the dominance of the petrodollar may be reflected in the dollar's position in global trade and savings, at a time when China is intensifying its efforts to strengthen its currency's presence, and the petrodollar system dates back to the 1974  agreement between Saudi Arabia and the United States, but the current shifts in trade flows indicate a gradual change in this system.