On the one hand, major buyers such as China and India now prefer to stock up on cheap Russian oil. On the other hand, exporters repeatedly found loopholes to circumvent the price caps imposed by Western countries. But now the country, which is dependent on oil exports, finds itself hit in other sensitive areas: While Ukraine is targeting Russian refineries with drone attacks, the USA is putting pressure on international banks to stall transfers from oil buyers to Russia.
Attacks on Russian oil refineries
Since mid-March alone, Ukraine has attacked at least eight Russian oil refineries with drones. The Ukrainian secret service SBU explained that this was intended to weaken the war enemy’s economy. According to insiders, more than a fifth of the oil refined in Russia was processed at the affected locations last year. According to Russian information, some attacks were repelled, and after other attacks operations were only disrupted for a short time. But according to calculations by the Reuters news agency, around 14 percent of the refinery capacity has now been paralyzed due to drone attacks.
After Ukraine set fire to several plants in the Samara region alone, the Kuibyshev refinery there stopped operating completely, according to industry sources. The Kuibyshev refinery only accounts for 1.34 percent of Russian oil processing. But the failures add up. A refinery in the Ryazan region, which accounts for 5.8 percent of the country’s processing, was able to operate at only 30 percent of its capacity for two weeks, according to insiders. The state operator Rosneft remained silent.
Gasoline export stop on March 1st
Russia, which usually exports more petroleum products than it imports, had already imposed a ban on exports of gasoline on March 1st. The military always receives preferential delivery of fuel. But there is concern in Russia that the economy and private individuals will be affected by bottlenecks and rising diesel and gasoline prices. Meanwhile, Russia is forced to import additional gasoline from its neighbor Belarus. These imports should be increased to 100,000 to 150,000 tons per month, said the chairman of the energy committee in parliament, Pavel Savalny. According to information from industry circles, the quantity had already increased to almost 3,000 tons in the first half of March, after it was 590 tons in February and there were no deliveries from Belarus in January.
Meanwhile, according to insiders, US sanctions threats against banks in China, Turkey and the United Arab Emirates (UAE) are causing delays in invoice amounts for oil deliveries arriving in Russia. The USA, like other Western countries, generally approves Russian oil exports in order not to trigger a price increase due to a shortage of world market supply. But they are pushing for price caps to reduce Russia’s revenue. They are trying to achieve this, among other things, by putting pressure on ship insurance companies and now increasingly on banks.
Since December 22nd, the US Treasury Department has been threatening banks with sanctions if they process payments without ensuring compliance with the sanctions against Russia. “The problems returned in December as banks and companies realized that the threat of US collateral sanctions was real,” said an oil trading insider.
Insider: Financial institutions are withdrawing from business
According to other insiders, financial institutions are trying to protect themselves with extensive guarantees from their clients – or are withdrawing from the business because of the bureaucracy involved. According to those in the know, the latter include First Abu Dhabi Bank and Dubai Islamic Bank in the United Arab Emirates. The banks Mashreq from the UAE, Ziraat and Vakifbank from Turkey as well as the Bank of China and the Chinese ICBC are still processing payments for Russian goods, but are now taking weeks or months to do so, as other industry representatives said. None of the banks commented on this.
Russia, however, acknowledged such problems. The states in question are under unprecedented pressure from the USA and the European Union, said Russian President Vladimir Putin’s spokesman Dmitry Peskov. “Of course that creates certain problems.” We are working on solutions. “But this is done in a discreet manner.”
