Russian oil companies can wait up to several months for payments for oil and fuel. Banks in China, the United Arab Emirates and India are starting to pay more and more attention to compliance with American sanctions against Russia. On Wednesday, Reuters reported on this with reference to eight anonymous sources.
According to their information, in recent weeks several banks from these countries have increased the requirements for compliance with sanctions and have also begun to require written guarantees from their clients that no person or company from the list of SDN (Special Designated Nationals issued by the US) is involved in the transaction, or that he is not the recipient of the payment.
It is this tightening that delays some payments, and may even lead to their complete rejection. This logically reduces Russian revenues, and the US thus achieves both objectives of the sanctions. Cut off the flow of money Russia is using to finance the invasion of Ukraine, but not harm global energy.
Western countries imposed sanctions on Russia in February 2022 after the country invaded Ukraine. Trading Russian oil is not illegal, but it must be sold below a set price ceiling of $60 a barrel. Therefore, Russia has redirected the flow of oil to Asia and Africa, or is trying to distribute it through shadow fleets of tankers that transport oil “on the black”.
The United States therefore tightened its control of the price ceiling at the end of last year, and individual tankers also began to appear on the sanctions list.
Recently, for example, all Indian refineries started rejecting Russian oil transported by PJSC Sovcomflot, which is Russia’s largest shipping company.
Stricter payment controls
According to Reuters sources, First Abu Dhabi Bank (FAB) and Dubai Islamic Bank (DIB) in the United Arab Emirates have suspended several accounts linked to trading in Russian goods. Mashreq Bank in the United Arab Emirates, Turkey’s Ziraat and Vakifbank, and China’s ICBC and Bank of China are still processing payments, according to their information, but it is taking weeks or more. One of the sources spoke of a delay of up to two months.
According to another of the sources, much stricter controls from US banks and the Treasury Department have forced companies and banks to comply with the sanctions.
Banks in the United Arab Emirates, for example, have been asked to provide details to US correspondent banks and the Treasury Department on whether they have any transactions going to China on behalf of a Russian entity. And no world bank wants to get into trouble with the US authorities.
Kremlin spokesman Dmitry Peskov also confirmed the delay, at least on the part of Chinese banks, to Reuters journalists. “Unprecedented pressure from the United States and the European Union on the People’s Republic of China continues, of course,” Peskov’s agency quotes.
“Of course, this creates certain problems, but it cannot become an obstacle to the further development of our trade and economic relations with China,” Peskov added.
Tags: Russia waiting months oil payment tightened sanctions control
