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Western Sanctions Delay Payments for Russia’s Oil Exports

Russia is seeing months of delays in payments for its oil exports as banks in its major trader partners, including China, the UAE, and Turkey, are now scrutinizing transactions wary of the tighter U.S. sanctions, numerous unnamed sources with knowledge of the matter have told Reuters.

Russian oil firms are struggling to collect the payments for their exports on time, which in turn delays payments to the Russian budget for use in the war in Ukraine.

Even as China, Turkey, and the United Arab Emirates have continued to buy Russian crude and fuels, banks in those countries are stepping up compliance checks for fear of secondary U.S. sanctions.

Banks are now demanding written guarantees that no sanctioned persons or entities are involved in the deals, according to Reuters’s sources.

Last week, Kremlin spokesman Dmitry Peskov said that the United States and the EU continue to exert “unprecedented pressure” on China to reject trade payments from Russia.

Several Chinese banks have halted processing payments in Chinese yuan from Russia, Russian newspaper Izvestia reported on Thursday, citing market sources. Ping An Bank and Bank of Ningbo have stopped payment processing, while other banks, including DBS Bank, Great Wall West China Bank, and China Zheshang Bank, have imposed some restrictions on payment operations from Russia, according to Izvestia’s sources.

In Turkey, Global Terminal Services (GTS), which operates the mid-sized Dortyol terminal on the Mediterranean, has decided to stop accepting Russia-origin volumes to avoid possible connections to Russian oil.

Trade between Russia and Turkey has suffered a setback since late December with some payments for imported Russian oil cargoes delayed, as banks are boosting compliance checks following a U.S. threat to sanction financial institutions for facilitating business with Russia.

Payments are pressured by sanctions, the Bank of Russia governor Elvira Nabiullina admitted last week.

“Due to sanctions, there are certainly difficulties with conducting cross-border payments,” Nabiullina was quoted as saying by Russia’s TASS news agency.    


By Tsvetana Paraskova for Oilprice.com

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