Pakistan is reported to have decided to purchase discounted Russian oil using the Chinese yuan, reflecting a global shift towards de-dollarization.
According to multiple reports, the move comes as part of the BRICS economic bloc’s efforts to conduct international trade in currencies other than the US dollar. Pakistan’s decision marks another transaction conducted using an alternative currency.
Reports suggest that the first cargo of over 750,000 barrels is expected to arrive in June, and Pakistan will pay for the oil with the Chinese yuan. Although the exact amount and mode of payment have not been disclosed, sources reveal that Pakistan has agreed to a discounted per-barrel price of around $50-$52, significantly lower than the G7 price cap on Russian oil of $60 per barrel.
This development follows the sanctions imposed on Russia by the EU, G7, and their allies, including a ban on seaborne oil exports and a price cap on Russian oil, in response to Russia’s invasion of Ukraine. The measures aim to distance the nation from the West. Meanwhile, talks of a BRICS trading currency are expected to progress at the annual BRICS summit, amid the focus on the Chinese yuan.
Reports also claim that The Bank of China is expected to facilitate the transaction, although the mode of payment and the discount offered to Pakistan remain undisclosed, as publicizing such information is not considered beneficial for either party. An official from Pakistan’s Ministry of Energy stated that Russia would supply URAL crude in the test cargo, which Pakistan Refinery Limited (PRL) will likely refine.
The decision to use the Chinese yuan for this transaction illustrates the currency’s growing acceptance in international trade, as well as concerns about the US abusing its dollar hegemony through sanctions. With the first shipment of 750,000 barrels anticipated to dock in June, the use of the Chinese yuan for the purchase of discounted Russian oil marks a significant move towards de-dollarization.
