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Indian Importers Of Russian Oil Brace For Banking Problems

Indian refiners buying Russian crude are preparing for problems with their bankers as the flagship Russian oil grade topped the G7-imposed price caps.

In a report citing sources from three Indian refiners, Bloomberg wrote today that the companies were bracing up for more requirements from banks before they grant them the loans to buy the cargoes.

Russia’s flagship crude grade, which has been trading consistently below the price cap set by the G7 and the European Union, climbed above $60 per barrel on Wednesday and remained there.

It is now, for the first time, that observers can judge if the price cap is actually working. Before, with Urals trading below it anyway, it could hardly be argued that the cap was doing anything to deliberately squeeze Russia’s oil export income.

Earlier this week, energy analyst Vandana Hari from Vanda Insights noted that this price for Urals will be problematic for Indian buyers.

“Indian banks have been extra cautious in the last few months for fear of sanctions, requiring the refiners to show that the free-on-board price of their cargo was below $60 in order to put the payment through,” Hari told Bloomberg.

According to the more recent Bloomberg report, buyers expect their bankers to start asking for more evidence to verify the price, at which the crude is being bought.

Also, importers of Russian crude will stop using Western insurance and tanker services - the basis on which the price cap was designed. As long as the price of the crude was below $60 per barrel, buyers could use Western shipping transport and insurance. If the price moved above $60 access to insurers and tanker owners in the West shut off.


According to one of the sources that Bloomberg spoke to, a switch from dollars to other currencies for payments for Russian cargo was also an option under consideration.

By Irina Slav for Oilprice.com

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  • Mamdouh Salameh on July 14 2023 said:
    India doesn’t recognize Western sanctions against Russia and therefore it will continue to buy Russian crude oil in increasing volumes well into the future.

    Moreover, the Western price cap on exports of Russian crude and products is dead.

    Indian refiners will have no problem sorting out their financial arrangements with Indian banks. India has been paying in rupees and petro-yuans for their Russian crude imports.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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