Indian buyers of Russian oil, a crucial lifeline for the Kremlin over the past months, are struggling under the weight of increasingly onerous demands from financiers wary of breaching Western sanctions, a headache that is slowing transactions and threatening to at least temporarily dent record flows to the Asian nation.

Refinery and banking executives report that the need to prove Russian imports comply with a $60-a-barrel cap imposed by the Group of Seven nations now requires additional steps and verification of official invoices, contract documents, plus shipping and insurance information — details not previously demanded.

As a result, Indian refiners are scrambling, said executives from two state-owned processors and two banks, who asked not to be identified as they’re not authorized to speak publicly. They added the checks — which bankers describe as in line with regulations — could slow down the pace of approvals and potentially weigh on India’s Russian purchases.

The timing is not fortuitous for Moscow. Curbs are increasing just as buyers also need to take supplies from long-term sellers such as Saudi Arabia, neglected in favor of opportunistic Russian purchases over 2022, in order to meet contracts agreed for the financial year ending March 31. 

Left without the European market in the aftermath of the invasion of Ukraine, Moscow has become more reliant than ever on its biggest oil customers in India and China. The European Union has sought to halt Russian oil flows into the region and to curb the ability of its banks, insurers and shippers from handling Russian trade. The G7 oil-price cap, meanwhile, is intended to keep crude in the market while crimping revenue that flows to the Kremlin, and into its war machine.

For refiners, making that cap work isn’t always simple. Refinery executives told Bloomberg that most of their Russian crude is purchased on a delivered-at-port basis, which takes into account the cargo’s overall price inclusive of shipping and insurance costs. This makes it tough to provide evidence of the standalone cost of the cargo on a so-called free-on-board basis, which banks are demanding, they added. 

Bankers emphasized that they are demanding only enough to protect themselves from inadvertently violating rules and regulations. This stalemate between refiners and banks is causing transactions to slow, they added.

India, one of the major centers of Asian demand, will continue to import large volumes of Russian crude at discounted levels, refinery executives said. Flows may still slow in the coming weeks, they added, in favor of other purchases.

Shipments have been purchased using US dollars, but also UAE Dirhams and Russian rubles.