MOSCOW (Reuters) – Russian oil companies face delays of up to months in paying for crude and fuel as banks in China, Turkey and the United Arab Emirates (UAE) become more wary of sanctions American secondary schools, according to eight sources familiar with the matter. said.
Delayed payments reduce Kremlin revenues and make them irregular, allowing Washington to achieve its dual sanctions policy goal: disrupting money going to the Kremlin to punish it for the war in Ukraine without interrupting global energy flows .
Several banks in China, the United Arab Emirates and Turkey have stepped up their sanctions compliance requirements in recent weeks, leading to delays or even rejections of money transfers to Moscow, according to the eight banking and trade sources.
Banks, wary of US secondary sanctions, have begun asking their customers to provide written guarantees that no person or entity on the US Special Designated Nationals (SDN) list is involved in a transaction or is recipient of a payment.
The sources asked to remain anonymous due to the sensitivity of the matter and the fact that they are not authorized to speak to the media.
In the United Arab Emirates, First Abu Dhabi Bank (FAB) and Dubai Islamic Bank (DIB) have suspended several accounts linked to trading in Russian products, two sources said.
The UAE’s Mashreq Bank, Turkey’s Ziraat and Vakifbank and China’s ICBC and Bank of China are still processing payments, but are taking weeks or months to process them, four sources said.
The Mashreq bank declined to comment. Banks FAB and DIB of the United Arab Emirates, Ziraat and Vakifbank of Turkey, ICBC of China and the Bank of China did not respond to requests for comment.
Kremlin spokesman Dmitry Peskov said payment problems existed when asked about reports that Chinese banks had slowed payments.
“Of course, the unprecedented pressure from the United States and the European Union on the People’s Republic of China continues,” Peskov said in a daily conference call with journalists.
“This of course creates certain problems, but cannot become an obstacle to the further development of our trade and economic relations (with China),” Peskov said.
AMERICAN EXECUTIVE ORDER
The West imposed a host of sanctions on Russia after its invasion of Ukraine in February 2022. Dealing with Russian oil is not illegal as long as it is sold below a Western-imposed price ceiling of 60 dollars per barrel.
Russian oil exports and corresponding payments were disrupted in the early months of the war, but later normalized when Moscow redirected flows to Asia and Africa away from Europe.
“Problems returned from December after banks and businesses realized the threat of US secondary sanctions was real,” a trade source said.
The source was referring to a US Treasury executive order issued on December 22, 2023, which warned it could apply sanctions to foreign banks for circumventing Russian price caps and called on them to strengthen their compliance.
This is the first direct warning about the possibility of secondary sanctions against Russia, putting it on an equal footing with Iran in certain trade areas.
Following the U.S. order, Chinese, UAE and Turkish banks that work with Russia increased controls, began requesting additional documentation and trained more staff to ensure transactions complied with the price cap, it said. commercial sources.
Additional documents may also include details of the ownership of all companies involved in the transaction and the personal data of those controlling the entities, so that banks can verify any exposure to the SDN list.
In late February, UAE banks had to step up their payment controls as they were asked to provide data to US correspondent banks and the US Treasury if they carried out transactions to China on behalf of a Russian entity, according to a banking source close to the matter. the question.
“This led to delays in processing payments to Russia,” one of the sources said.
One source said one payment was delayed by two months, while another said the delays amounted to two or three weeks.
“It has become difficult even for dollar transactions. Sometimes it takes weeks for a direct transaction in yuan and rubles to be executed,” said one of the traders.
(Reporting by Reuters journalists in MOSCOW, Aizhu Chen in SINGAPORE, Engen Tham in BEIJING, additional reporting by Ziyi Tang, Florence Tan, Can Sezer, Jonathan Spicer, Federico Maccioni, Nidhi Verma, Hadeel Al Sayegh and Kevin Huang; editing by David Evans)
