UAE refuses to help Russia trade oil around the dollar

UAE refuses to help Russia trade oil around the dollar

Despite Moscow’s desire to abandon settlements in dollars in international trade, it has not yet been possible to do this in the case of oil exports to India.

Russian oil suppliers in July asked at least two Indian oil companies to pay in UAE dirhams. Reuters obtained an invoice received by one of these companies: payments in it are calculated in dollars, but it contains a request to pay in the currency of the United Arab Emirates. The money had to be transferred to Gazprombank through its correspondent bank in Dubai, Mashreq Bank.

Three people familiar with these operations, told Reuters that both Indian companies ended up paying in dollars because Mashreq refused to transact in dirhams.

The agency was unable to find out the reason for the refusal. But Mashreq has a branch in New York, that is, it conducts dollar settlements. Meanwhile, the United States is urging other countries not to help Russia bypass the restrictions imposed on it, otherwise threatening secondary sanctions, due to which foreign banks may lose access to the dollar financial system.

At the end of June, a delegation from the US Treasury led by Deputy Treasury Secretary Wally Adeyemo visited the UAE. According to Bloomberg, he was instructed achieve blocking the assets of wealthy Russians who, after the start of the war, began to fly to Dubai en masse, as well as to insist on the implementation of the sanctions imposed against the Russian Federation.

According to a Reuters source, the oil deals were eventually settled by the State Bank of India branch in Abu Dhabi, and payments were made in dollars. All participants in the transactions, as well as the US Treasury Department, which oversees sanctions issues, declined to comment.

India practically did not buy Russian oil last year due to high transportation costs, but after the start of the war in Ukraine, it began to be sold at a large discount (about 30% to the Brent price), which made its import profitable. In the second quarter, average daily purchases were around 800,000-900,000 barrels, then declined, but rose again to more than 900,000 barrels in August, according to Bloomberg (estimated based on average volumes over the past four weeks to smooth out fluctuations). In September, imports to India began to decline rapidly (to 500,000 barrels in the week to September 23). But at the same time, secret shipments from Russia have increased – when tankers do not indicate the port of destination; usually such ships end up in India and China, Bloomberg points out.

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