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Exclusive-Major buyers of Russian oil struggle with bank guarantees -sources -Breaking

by Mike Robinson

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© Reuters. This illustration was taken February 24, 2022. It shows models of oil barrels, a pump jack and flag colors of Ukraine and Russia. REUTERS/Dado Ruvic/Illustration


By Dmitry Zhdannikov

LONDON, (Reuters) – At least three of the largest buyers of Russian oil were unable to obtain letters of credit from Western banks on Thursday to pay for purchases. Four trading sources cited market uncertainties following Russia’s invasion of Ukraine.

“Banks are not willing to open LC’s for the moment so it is a bit of a standoff,” one of the sources said. Because of the sensitive nature and importance of the topic, he declined to identify himself.

The seller will need to obtain letters of credit from his bank in order to guarantee that the payment is made on the due date.

The top Russian oil purchasers are Western oil companies like BP (NYSE) and Shell, (LON). ENI (MI:), TotalEnergies, Equinor, Chevron (NYSE: Exxon Mobil (NYSE:) as well as trading houses like Vitol (OTC), Glencore, Trafigura Gunvor, Mercuria.

Sources did not identify which banks declined to issue LCs.

Almost every major Western bank is active in commodity trading and has the ability to issue LCs.

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