Russia faces delays in oil payments as China, UAE and Turkey tighten controls on banks - Reuters
Kyiv • UNN
Russian oil companies are facing delays of up to several months in receiving payments from banks in China, Turkey, and the UAE due to heightened caution about possible secondary US sanctions that undermine the Kremlin's oil export revenues.
Russian oil companies are facing delays of up to several months in paying for oil and fuel as banks in China, Turkey and the United Arab Emirates (UAE) become more cautious about secondary US sanctions, Reuters reports, citing eight sources, UNN writes.
Details
"Delays in payments reduce the Kremlin's revenues and make them unstable, allowing Washington to achieve its dual sanctions goal of disrupting the Kremlin's flow of money to punish it for its war in Ukraine without interrupting global energy flows," the publication says.
According to eight banking and trade sources, "in recent weeks, several banks in China, the UAE and Turkey have tightened their sanctions compliance requirements, leading to delays or even refusals of money transfers to Moscow.
"Banks, fearing secondary US sanctions, have begun asking their clients to provide written guarantees that no individual or legal entity from the US SDN (Special Designated Nationals) list is involved in the transaction or is the beneficiary of the payment," the publication says.
According to two sources, "in the UAE, First Abu Dhabi Bank (FAB) and Dubai Islamic Bank (DIB) have blocked several accounts related to the trade in Russian goods.
"The UAE's Mashreq Bank, Turkey's Ziraat and Vakifbank, and China's ICBC and Bank of China are still processing payments, but it takes weeks or months to process them," four sources said.
"The problems returned in December after banks and companies realized that the threat of secondary US sanctions was real," said one trade source.
The source was referring to an order issued by the US Treasury Department on December 22, 2023, which warned that it could impose sanctions on foreign banks for evading Russia's price ceiling and called on them to step up compliance. This was the first direct warning of the possibility of secondary sanctions against Russia, putting it on a par with Iran in some areas of trade, the newspaper notes.
Following the US order, Chinese, UAE, and Turkish banks working with Russia have increased the number of inspections, requested additional documentation, and trained more employees to ensure that transactions meet the price ceiling, trade sources said.
Additional documents may also include detailed information on the ownership of all companies involved in the transaction and the identity of the persons controlling these organizations so that banks can check on any exposure to the SDN list.
In late February, UAE banks had to tighten their control over payments as they were asked to provide data to US correspondent banks and the US Treasury if they had transactions going to China on behalf of a Russian organization, according to one banking source familiar with the situation.
"This meant delays in processing payments to Russia," one source said.
One source reported that one payment was delayed by two months, while another reported delays of two to three weeks.
"It has become difficult, and not even for dollar transactions. Sometimes it takes weeks to conduct a direct yuan-ruble trade," said one trader.
Kremlin spokesman Dmitry Peskov is quoted as saying that problems with payments exist when asked about reports that banks in China have slowed down payments.
He said that there are "certain problems, but they cannot hinder the further development of our trade and economic relations (with China).
Addendum
The West has imposed numerous sanctions on Russia since it invaded Ukraine in February 2022. It is not illegal to work with Russian oil if it is sold below the Western price ceiling of $60 per barrel.
Russian oil exports and payments for it were disrupted in the first months of the war, but "later normalized when Moscow redirected oil flows to Asia and Africa, away from Europe," the publication points out.
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