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Azeri oil firm Socar has redeemed a $1.3 billion syndicated loan led by U.S. banks Citi and JP Morgan two years ahead of schedule, around the time the Azeri firm received a loan of a similar amount from Russian oil firm Lukoil, Reuters reported, citing three banking and trading sources familiar with the matter.

Citi, JP Morgan and Socar declined to comment on the early redemption of the U.S. bank-led loan. Lukoil and Socar have declined to respond to requests for comment on the Lukoil loan, which was previously reported by Reuters.

The sources said there was no suggestion that either transaction violated U.S. or other financial sanctions against companies doing business with Russia.

Nevertheless, the sources said the early redemption had the effect of allowing Moscow to resume sales of crude to Socar's Star refinery in Turkey, a major longstanding buyer, at a time when other refiners worldwide were shunning Russian oil.

Around the time of the transactions, Socar resumed purchases of Russian oil at Star, which it had halted last year. The sources said the halt had been at the request of the U.S. banking consortium, which feared falling foul of sanctions following Russia's invasion of Ukraine.

"Star was designed to process Russian oil, so when Western banks told it to stop Russian oil refining it became a problem," said one of the three sources, who asked not to be identified as he is not allowed to speak to media.

"No loan, no problem," the source said, explaining the logic of the early redemption of the loan from U.S. banks.

The Citi- and JPMorgan-led syndicate had loaned the money to Socar's Turkish unit in 2021 for five years, according to a Socar Turkey statement at the time.

The redemption happened at the end of last year, around the time Lukoil loaned Socar $1.5 billion as part of a deal to resume supplies to Star via Lukoil's trading unit Litasco, the sources said.

Sanctions expert Viktor Winkler, a former head of sanctions compliance at Germany's Commerzbank AG, told Reuters that the early redemption of the loan to Socar, at a time when Socar was also receiving Russian funds, should have triggered scrutiny by the U.S. banks.