Russian oil firms are reportedly having trouble collecting payments from customers in China, Turkey, and the United Arab Emirates (UAE) because buyers have grown more nervous about triggering U.S. sanctions against Russia.

Reuters cited eight sources on Wednesday to back up reports that Russian oil companies must wade through months of paperwork to get paid:

Banks, cautious of the U.S. secondary sanctions, started to ask their clients to provide written guarantees that no person or entity from the U.S. SDN (Special Designated Nationals) list is involved in a deal or is a beneficiary of a payment.

In the UAE, banks First Abu Dhabi Bank (FAB) and Dubai Islamic Bank (DIB) have suspended several accounts linked to the trading of Russian goods, two sources said.

UAE’s Mashreq bank, Turkey’s Ziraat and Vakifbank and Chinese banks ICBC and Bank of China still process payments but take weeks or months to process them, four sources said.

Some of the sources feared punishment because the issue with Emirati banks is considered “sensitive,” but Kremlin spokesman Dmitry Peskov was willing to admit that payments are coming in slowly from China. He blamed the slow payments on “unprecedented pressure from the United States and European Union on the People’s Republic of China.”

“Secondary sanctions” affect persons and entities who are not citizens of the United States, and they can take effect even when no U.S. goods or currency are involved in the prohibited activity. The U.S. essentially punishes violators by restricting their access to American markets or currency transactions.

The effectiveness of sanctions against Russia has been a topic of much debate since the early days of the latest Ukraine invasion.

Retiring Undersecretary of State for Political Affairs Victoria Nuland claimed in a February interview that sanctions were working to hinder Russia’s ability to fund its invasion until about six months ago when the Russians developed methods of getting around them and a new batch of sanctions had to be developed to maintain financial pressure on Moscow’s war machine.

Critics have said the sanctions were never very effective at all because Russia found too many ways to get its oil to willing buyers, including brazen smuggling via ship-to-ship transfers at sea. The Russians themselves claimed their energy revenue was doing fine until the latter half of 2023 when weak prices and lower sales to Europe brought revenue down by 24 percent.

According to Reuters’ sources, Russian oil companies were doing brisk business in Asia and Africa until December, when the U.S. Treasury Department issued an order that began making foreign bankers nervous about handling Moscow’s oil money.

An oil tanker is moored at the Sheskharis complex, part of Chernomortransneft JSC, a subsidiary of Transneft PJSC, in Novorossiysk, Russia, on Oct. 11, 2022, one of the largest facilities for oil and petroleum products in southern Russia. (AP Photo, File)

The UAE, Turkey, and even China took the order seriously enough to begin tightening up regulatory compliance and demanding more documentation for transactions involving Russian exports. The Emiratis became especially wary of Chinese firms laundering Russia’s oil money, causing transactions that once processed in days to creep along for weeks or months.

Bank of Russia governor Elvira Nabiullina complained on Friday that tighter Western sanctions were “hindering the process” of Russia “rebounding” from weak oil prices at the end of 2023.

Nabiullina boasted that Russian companies are “quite flexible” and would find ways around the new sanctions.

Perhaps the most awkward link in the Russia sanctions chain has been India, which is closely allied with the United States but also maintains good relations with Moscow and is absolutely ravenous for cheap Russian oil.

The U.S. has been cautious about damaging its strategic partnership with India by harping on its oil imports from Russia. India became the top buyer of Russian oil in 2023 after some of Moscow’s other customers backed away. 

In fact, India’s record purchases last year arguably made Russia richer than it has ever been — and some of the crude oil India imported from Russia was refined and then sold to customers in the United States.

India does appear to be adjusting its buying habits, without much public commentary. Indian imports of U.S. crude oil reached their highest level in over a year this month, surpassing 250,000 barrels per day (bpd). 

At the same time, purchases of Russian oil are declining, and India’s largest refining company outright refused at least one huge shipment of Russian crude after sanctions were tightened.

Bloomberg News reported on Friday that Indian refineries will begin refusing all deliveries of Russian crude carried by Sovcomflot, Russia’s largest shipping company and a target of U.S. sanctions. Russian media reported in mid-March that India stopped buying low-sulfur premium oil from Russia in January.