Indian banks consider financing non-sanctioned Russian oil trade

Indian financial institutions have shifted their stance to accommodate funding for Russian oil imports under specific conditions, sources with knowledge of the matter indicate. They now consider supporting transactions involving non-sanctioned suppliers while strictly adhering to international restrictions on Russian exports.

This change follows recent confusion among lenders who previously hesitated to process payments for all Russian crude shipments due to verification challenges in the supply chain. These financial entities reportedly resolved these compliance hurdles following the implementation of new US restrictions active since last Friday.

Global attention remains fixed on India’s crude procurement strategies amid heightened US diplomatic pressure on Moscow regarding the Ukraine conflict. While New Delhi has been a crucial outlet for Russian crude exports, domestic refiners have demonstrated flexibility by sourcing alternative (though more expensive) barrels from global suppliers.

Banking institutions have established structured verification protocols to handle Russian oil payments, according to sources. Transaction settlement mechanisms now include options for UAE dirhams and Chinese yuan alongside other approved currencies.

Financial and refining entities have strengthened their verification procedures, scrutinizing cargo origin certificates, shipping documentation, and vessel histories. Enhanced due diligence includes inspecting whether vessels participated in transshipment operations involving sanctioned entities.

The latest US sanctions targeting Rosneft PJSC, Lukoil PJSC, Gazprom Neft PJSC, and Surgutneftegas PJSC caused Indian processors to avoid December-loading Russian crude contracts. These measures significantly impacted a trade relationship that expanded dramatically post-Ukraine invasion, wherein India became Russia’s primary maritime crude customer.

Sanction-driven market adjustments have pushed Urals crude discounts to nearly $7 below Dated Brent benchmarks – a significant increase from the previous $3 differential. This widening price gap renews economic incentives for cost-conscious Indian refiners to pursue compliant Russian oil transactions.

Refining companies maintain caution regarding potential payment disruptions or secondary sanctions when handling cargoes linked with blacklisted entities. Though enhanced verification may slow transaction processing, industry experts anticipate these measures will facilitate continued imports of permissible Russian volumes.

Additional reporting available via external financial news platforms

Published on November 25, 2025