Fear of sanctions keeps SBI off Russian oil deals

livemint.com:

NEW DELHI : State Bank of India (SBI) has long avoided payment transactions for Russian oil bought by state-run refiners to avert US sanctions that came into force on 5 December 2022, two people aware of the matter said. SBI, India’s largest lender, is the authorized dealer bank for foreign transactions of state-run refiners. The sanctions of the US treasury department’s Office of Foreign Assets Control on maritime transportation of the Russian Federation-origin oil took effect on 5 December 2022, and for seaborne transportation of petroleum products on 5 February 2023.

Indian banks operating in the US include SBI, Bank of Baroda and Bank of India. Mint earlier reported about OFAC checking whether these banks conform to the G7 price cap of $60 a barrel for Russian oil. Mint also reported about India’s largest lender requesting data on purchasing prices from refiners such as Indian Oil Corp.

Ltd (IOCL), Bharat Petroleum Corp. Ltd (BPCL)and Hindustan Petroleum Corp. Ltd (HPCL) to prevent a breach of US sanctions by inadvertently processing payments for Russian oil purchased above the cap.

“Since the time the OFAC sanctions have been imposed, SBI has been avoiding making bank payment transfer to Rosneft for the purchase of Russian oil. It is because SBI has such a major presence in the US. This, despite the fact that bank transfer within the price cap can be made," said one of the two people cited above on the condition of anonymity.

The G7 set a price cap on Russian seaborne crude oil to limit Russia’s earnings from exports to squeeze its military budget. The move bars the purchase and import of crude oil from Russia at rates exceeding the price cap. It is the strategy of the West to isolate Russia, as well as to ensure