India's HDFC Bank and at least four foreign banks have stopped opening and confirming letters of credit (L/Cs) for oil imports to Nayara Energy, the Russian-backed owner-operator of India's second largest single-site refinery, Reuters has reported.

Citing four banking and industry sources, the news agency says some suppliers are seeking payment upfront to avoid potential problems resulting from western sanctions against Moscow.

Banks' 'no comment'

International banks such as Citibank, JP Morgan, Deutsche Bank and Japan's Mitsubishi UFJ Financial Group have joined HDFC in halting L/C openings and confirmation for Nayara the four sources reportedly said.

The banks all declined to comment. Citigroup, the US bank with the biggest footprint in Russia, meanwhile has said it will expand its exit from Russia to go beyond the long-planned sale of its consumer bank there.

No sanctions

Sanctions have not been imposed on Nayara in the international response to Russia's invasion of Ukraine, but Russian energy giant Rosneft, which owns 49 per cent of the Indian refiner, has been. Kesani Enterprises, a consortium led by Trafigura Group and Russia's UCP Investment Group, also owns a 49 per cent of the refiner.

Nayara recently recommenced purchasing Russian oil after a gap of a year, buying about 1.8 million barrels of Urals from Trafigura, a move in line with several Indian companies snapping up Russian oil as it is available at a deep discount.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.