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US bank J.P. Morgan facilitates Syrian deal for Saudi oil products

BANIYAS, Syria  - US bank J.P. Morgan helped Syria to issue its first letter of credit in more than a decade, a senior Syrian energy official told Reuters, allowing the country to execute a commercial agreement this month for fuel products from Saudi Aramco.

The move marks a step towards restoring Syria's access to international banking channels after the ousting of former Syrian President Bashar al-Assad nearly two years ago.

Syria's new leadership has prioritised the rebuilding of the country's political and financial ties after years of isolation. The US lifted sweeping sanctions on the country last year and removed Syria's designation as a state sponsor of terrorism last August.

The Central Bank of Syria said in a statement on October 11 that it had issued its first letter of credit in 14 years through a major US financial institution to back a deal with Aramco, but did not name the bank.

Mohammad Qawja, executive director of financial affairs at the Syrian Petroleum Company (SPC), said that J.P. Morgan's role was to "confirm the issued letter of credit and a guarantee of its execution".

He said that SPC had already received 65,000 metric tons of diesel under the deal and hoped that future shipments could expand to include gasoline and, later, light crude oil.

"Given the current circumstances in the region — such as the sharp global rise in fuel prices and the difficulties in securing supplies and supply lines for petroleum products and crude oil — this agreement offers, first, the securing of fuel supplies for the Syrian domestic market," Qawja said, adding that the letter of credit provides greater flexibility in managing payment obligations.

J.P. Morgan declined to comment on the arrangement.

(Reporting by Firas Makdesi, Karam al-Masri and Feras Dalatey Editing by David Goodman)