Banks in India are now willing to consider financing trade in Russian oil if volumes come from non-blacklisted sellers and transactions are sanctions-compliant, according to people familiar with the matter.
That’s a shift from a few weeks ago — before the latest US curbs, which took effect on Friday — when lenders were wary of clearing payments for any Russian cargoes, citing difficulties in verifying the supply chain, the people said. They declined to be named due to the sensitivity of the matter.
India’s oil-buying patterns are in the spotlight as Washington raises the pressure against Moscow over the war in Ukraine, while at the same time promoting talks aimed at ending the conflict. The South Asian nation is a vital customer for Russian crude, although local refiners have been able to source alternative, pricier barrels in a well-supplied global market.
Banks have worked out a compliance mechanism to service payment requests from refiners for Russian barrels, the people said. Among them, transactions could be processed in United Arab Emirates’ dirhams and Chinese yuan.
Indian lenders and refiners are also intensifying verification, checking where oil is produced, as well as examining vessels used for transit, the people said. The moves involve looking at vessel histories, including whether they were involved in ship-to-ship transfers linked to any blacklisted entity, the people added.
Most Indian refiners had skipped placing orders for Russian crude for December delivery with the US sanctions on key producers Rosneft PJSC and Lukoil PJSC. That added to curbs on Gazprom Neft PJSC and Surgutneftegas PJSC. Together, the moves dealt a blow to a trade that has flourished since Russia’s 2022 invasion of Ukraine as India became Moscow’s largest seaborne crude customer.
Given the curbs, the discount on Russia’s flagship Urals grade has widened to about $7 a barrel to the Dated Brent benchmark. That’s increased the incentive for price-sensitive local refiners to explore options on acquiring the cut-price oil. The discount was about $3 before the latest sanctions.
To be sure, refiners remain wary that any cargo linked to sanctioned firms could cause a freeze in payments and expose them to costly arbitration or secondary sanctions, the people said. While stricter checks may delay bookings, they’re expected to keep at least some Russian flows alive.
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