Local currencies gain ground in energy trade among BRICS

International energy trade is undergoing a significant structural shift during 2025 and 2026. BRICS countries are accelerating their transition toward settlements in local currencies, a move that reflects both economic opportunities and emerging geopolitical realities. Although the U.S. dollar maintains its dominant position in global markets, the increasing adoption of local currencies is redefining the landscape of bilateral oil and gas trade.

A transformation driven by major economies

China, India, and Russia are leading this decoupling from the dollar. Data indicates that approximately 20% of oil transactions are currently settled in local currencies, a figure that reflects the combined weight of these nations in global energy trade. China has significantly expanded the use of the petro-yuan (renminbi), while Russia has consolidated payments in rubles, and India has promoted the use of rupees in transactions with regional trading partners. These initiatives represent more than mere financial operations—they are expressions of a coordinated strategy to reduce dependence on the U.S. monetary system.

Europe, though to a lesser extent, is also participating in this transition, recognizing the operational and political advantages of settling transactions in its own local currencies. This pattern is not solely economic but also responds to broader geopolitical tensions seeking to diversify international payment mechanisms.

Implications for the future of the petrodollar

While the petrodollar retains its unquestioned influence, the persistence of substantial volumes of energy trade settled in local currencies could gradually erode its primacy. Current geopolitical changes have accelerated this process, allowing alternative settlement platforms to gain credibility and adoption.

The challenge facing the global financial system is not an immediate rupture but a slow yet steady fragmentation. Local currencies, backed by economies with significant weight in energy trade, represent a viable alternative that international financial institutions cannot ignore. As we move into 2026, this pattern could intensify, solidifying a new balance in global energy markets.