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India Races to Settle Payments for Russian Oil Before U.S. Sanctions Bite
Indian state-held refiners are targeting to settle the payments for Russian oil in half the time they have taken so far, as part of efforts to complete the deals before the seven-week wind-down period in the latest U.S. sanctions ends at the end of February.
Refiners are now looking to settle the payments in just two days instead of five days, sources with knowledge of the matter told Bloomberg on Wednesday.
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The outgoing U.S. Administration on Friday imposed the most severe sanctions on Russia’s oil yet, designating two major Russian oil companies, Gazprom Neft and Surgutneftegas, as well as 183 vessels, dozens of oil traders, oilfield service providers, insurance companies, and energy officials.
The sanctions caught a few million barrels of crude oil en route to India in a precarious situation.
At least 4.4 million barrels of crude from Russia are currently being shipped to India, according to ship-tracking data compiled by Bloomberg and Kpler. Some of these are traveling on newly-sanctioned tankers and the fate of part of the cargoes is unknown.
There is a wind-down period until February 27 for parties to complete dealings with now-sanctioned entities and vessels. But Indian refiners are eager to settle the payments and steer clear of the sanctioned tankers in the future, according to Bloomberg’s sources.
India’s refiners have stopped doing business with the Russian tankers and companies sanctioned by the U.S. on Friday, a source at the Indian government told Reuters on Monday.
It is believed that a quarter of the Russian shadow fleet has now been sanctioned.
India doesn’t expect major disruptions during the wind-down period until March.
But “Going forward, it’s early days yet to anticipate the impact, how discounts shape up, if somebody is willing to sell below the $60 price cap,” a source with the Indian government told Reuters earlier this week.
By Charles Kennedy for Oilprice.com
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Charles Kennedy
Charles is a writer for Oilprice.com
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The United States is used to this practice but what could it do with a nuclear and economic superpower and the world’s third-largest economy who doesn’t recognize US sanctions against Russia and has been ignoring them since they were imposed on it.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert