BRICS: Under 10% of Russian Oil Now Traded in US Dollars

• Sanctions on Russia Prompts De-dollarization Initiative
• BRICS Countries Opt for Local Currencies in Trade
• Saudi Arabia Procures Cheap Russian Oil
• The Rise of Local Currencies in BRICS
• BRICS Oil Payments in US Dollars Dwindle
• Gulf Cooperation Council Supports Russia
• Conclusion

Sanctions on Russia Prompts De-dollarization Initiative

In February 2022, the United States imposed sanctions on Russia due to their invasion and acts of war against neighboring Ukraine. As a result, Russia's economy was significantly impacted, struggling to conduct international business without the use of the US dollar. Nonetheless, the BRICS alliance, consisting of Brazil, Russia, India, China, and South Africa, initiated a response in support of Russia by spearheading the de-dollarization initiative, which introduced the use of local currencies for crude oil payments, marginalizing the US dollar.

BRICS Countries Opt for Local Currencies in Trade

Members of the BRICS alliance, including China, India, Saudi Arabia, and the UAE, replaced the US dollar with local currencies, mainly the Chinese Yuan, for oil procurement from Russia. Russia responded by expanding its crude oil export to BRICS and other developing countries without the requirement of the US dollar. A majority of these international transactions were settled in local currencies such as the Chinese Yuan and the Russian Ruble.

Saudi Arabia Procures Cheap Russian Oil

In the wake of the sanctions, Saudi Arabia exploited the opportunity to purchase inexpensive Russian oil and distribute it across Europe. Russian crude oil has become more affordable due to these sanctions, and many countries are capitalizing on this. For instance, by using local currencies for oil payments, India has managed to save approximately $7 billion annually.

The Rise of Local Currencies in BRICS

More broadly, the BRICS alliance is bolstering their economies by prioritizing local currencies over the US dollar. This shift in economic strategy could potentially impact various sectors within the United States if BRICS continues to devalue the dollar in international trade.

BRICS Oil Payments in US Dollars Dwindle

According to reports from Business Insider, Russia, a key member of the BRICS alliance, conducted less than 10% of all transactions in US dollars when selling crude oil worldwide. Local currencies such as the Chinese Yuan and Russian Ruble were used for about 90% of the oil settlements.

Gulf Cooperation Council Supports Russia

The Gulf Cooperation Council (GCC) has also disclosed plans to carry out business with Russia using local currencies, providing a further boost to the Russian economy despite the US sanctions.

Conclusion

In summary, Russia appears to have effectively circumvented US sanctions with support from other developing nations and alliances like BRICS and the GCC, which have helped facilitate business transactions for crude oil without the reliance on the US dollar.

Edited by Jonathan Stoker