State Bank of India, the largest lender in the country, continues to shun processing payments for purchases of Russian oil despite the temporary U.S. waiver for India to buy Russia’s crude stashed in floating storage in Asia, sources with knowledge of the situation have told Bloomberg.
State Bank of India (SBI) is unwilling to risk its reputation amid uncertainties about how long the waiver, currently for one month, would last. The top Indian bank also looks to protect its large exposure to the U.S., according to Bloomberg’s anonymous sources.
The United States accounts for 26% of the Indian bank’s international loan portfolio, the largest share outside India, according to a quarterly presentation from last month.
At the end of last year, after the major crude flow shake-up with the U.S. sanctions on Russia’s top producers and exporters, Rosneft and Lukoil, some Indian banks were already considering financing Russian oil trades that involve only non-sanctioned entities and sanctions-compliant pricing and payments.
But STI has not and, according to Bloomberg’s sources, it is still shunning payments involving Russian crude.
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India, the world’s third-largest crude importer, depends on Middle East supply for about 60% of its imports, and the de facto halted tanker traffic in the Strait of Hormuz has put severe pressure on its supplies.
So the U.S. Treasury’s Office of Foreign Assets Control (OFAC) last week issued a general license to India for Indian refiners to buy Russian crude loaded on any vessel, including blocked vessels, on or before March 5, 2026, until April 4, 2026.
As of March 6, about 130 million barrels of Russian crude remained on the water, including around 27 million barrels in the Arabian Sea/Indian Ocean region, about 20 million barrels near the Red Sea and Suez Canal routes, and roughly 7.5 million barrels around Singapore, according to data from Kpler.
The U.S. waiver offers short-term relief to Indian refiners, Kpler’s Sumit Ritolia said on Friday. However, competition from China for the same barrels could limit the extent of India’s benefit, the analyst noted.
By Charles Kennedy for Oilprice.com
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