Bank of Baroda stops clearing payments for above-cap Russian oil

               Russia has the largest reserves of oil and is one of the largest producers of oil.  It has one of the largest petroleum industry and was one of the largest exporter of oil in the world. But with the onset of  Russia - Ukraine war in 2022, the Russian oil became a matter of concern for all the major countries.  The situation suddenly changed when the major countries which were buying oil from Russia stopped buying oil from them.  The Group of Seven(G7), The European Union and Australia set the price cap of Russian oil to $60 per barrel.  This price cap was to make Russia sell oil at a lower price in order to stop funding Russia, which otherwise will help them to gain more financial support to proceed with the war.  Now India and China are one of the top buyers of Russian oil.  As soon as the war started, the buyers of Russian oil started declining and then gradually the price started to fall.  When the oil prices became very low, India utilised this opportunity to purchase more oil from Russia at a discount rate.  Earlier India did not buy oil from Russia due to high cost and transportation expenses.  At that time Iraq was India's biggest supplier of oil and this was replaced by Russia later.  Also the price cap imposed on Russian oil has brought a big blow to Russia as already it was selling at a discounted rate. 

              Apart from this 60$ barrel price cap restriction, the G7 based financial companies will only provide transport and other services to Russian based crude oil and thus, any other kind of help will not be allowed.  As European Union and United States Of America has completely banned the Russian oil, the other countries of G7 will be bound to follow this price cap.  In this an exemption to price  cap is given to Russian oil flowing through pipelines, which supplies mainly to countries like Hungary.  Inspite of all these restrictions , some Indian refiners purchased Russian oil in United Emirates Dirham currency for a price above $60 using Bank of Baroda.  This was against the price cap imposed by G7.  This made Bank of Baroda to be more cautious in settling payments for Russian oil above the price cap.

             At the same time, another Indian bank, Axis bank has also not responded even though some refineries made payment for Russian crude oil in Dirhams through Axis bank also.  Last year vostro accounts were opened by Russian banks in connection with the Indian banks to facilitate more easy Rupee trade.  But the processing has still not started for these vostro accounts.  On the other hand, apart from the price cap decision,  the other opposition countries will make it harder for Russia to hire oil tankers, which will restrict Russia to sell and ship the oil to its customers.  The main objective behind all these is to reduce the revenue of Russia and thus save Ukraine from the attack of Russia.