diff --git a/changelog/unreleased/issue-4004 b/changelog/unreleased/issue-4004
new file mode 100644
index 000000000..ca23af26f
--- /dev/null
+++ b/changelog/unreleased/issue-4004
@@ -0,0 +1,12 @@
+Bugfix: Allow use of container level SAS/SAT tokens with Azure backend
+
+When using a SAS/SAT token for authentication with Azure, restic was expecting
+the provided token to be generated at the account level, granting permissions
+to the storage account and all its containers. This caused an error that did
+not allow tokens that were generated at the container level to be used to 
+initalize a repository.
+Restic now allows SAS/SAT tokens that were generated at the account or 
+container level to be used to initalize a repository.
+
+https://github.com/restic/restic/issues/4004
+https://github.com/restic/restic/pull/5093
diff --git a/internal/backend/azure/azure.go b/internal/backend/azure/azure.go
index e09593fd6..8f5ee9f00 100644
--- a/internal/backend/azure/azure.go
+++ b/internal/backend/azure/azure.go
@@ -157,6 +157,12 @@ func Create(ctx context.Context, cfg Config, rt http.RoundTripper) (*Backend, er
 		if err != nil {
 			return nil, errors.Wrap(err, "container.Create")
 		}
+	} else if err != nil && bloberror.HasCode(err, bloberror.AuthorizationFailure) {
+		// We ignore this Auth. Failure, as the failure is related to the type
+		// of SAS/SAT, not an actual real failure. If the token is invalid, we
+		// fail later on anyway.
+		// For details see Issue #4004.
+		debug.Log("Ignoring AuthorizationFailure when calling GetProperties")
 	} else if err != nil {
 		return be, errors.Wrap(err, "container.GetProperties")
 	}
diff --git a/internal/backend/azure/azure_test.go b/internal/backend/azure/azure_test.go
index 7df27d325..adafb6b03 100644
--- a/internal/backend/azure/azure_test.go
+++ b/internal/backend/azure/azure_test.go
@@ -80,6 +80,91 @@ func BenchmarkBackendAzure(t *testing.B) {
 	newAzureTestSuite().RunBenchmarks(t)
 }
 
+// TestBackendAzureAccountToken tests that a Storage Account SAS/SAT token can authorize.
+// This test ensures that restic can use a token that was generated using the storage
+// account keys can be used to authorize the azure connection.
+// Requires the RESTIC_TEST_AZURE_ACCOUNT_NAME, RESTIC_TEST_AZURE_REPOSITORY, and the
+// RESTIC_TEST_AZURE_ACCOUNT_SAS environment variables to be set, otherwise this test
+// will be skipped.
+func TestBackendAzureAccountToken(t *testing.T) {
+	vars := []string{
+		"RESTIC_TEST_AZURE_ACCOUNT_NAME",
+		"RESTIC_TEST_AZURE_REPOSITORY",
+		"RESTIC_TEST_AZURE_ACCOUNT_SAS",
+	}
+
+	for _, v := range vars {
+		if os.Getenv(v) == "" {
+			t.Skipf("set %v to test SAS/SAT Token Authentication", v)
+			return
+		}
+	}
+
+	ctx, cancel := context.WithCancel(context.TODO())
+	defer cancel()
+
+	cfg, err := azure.ParseConfig(os.Getenv("RESTIC_TEST_AZURE_REPOSITORY"))
+	if err != nil {
+		t.Fatal(err)
+	}
+
+	cfg.AccountName = os.Getenv("RESTIC_TEST_AZURE_ACCOUNT_NAME")
+	cfg.AccountSAS = options.NewSecretString(os.Getenv("RESTIC_TEST_AZURE_ACCOUNT_SAS"))
+
+	tr, err := backend.Transport(backend.TransportOptions{})
+	if err != nil {
+		t.Fatal(err)
+	}
+
+	_, err = azure.Create(ctx, *cfg, tr)
+	if err != nil {
+		t.Fatal(err)
+	}
+}
+
+// TestBackendAzureContainerToken tests that a container SAS/SAT token can authorize.
+// This test ensures that restic can use a token that was generated using a user
+// delegation key against the container we are storing data in can be used to
+// authorize the azure connection.
+// Requires the RESTIC_TEST_AZURE_ACCOUNT_NAME, RESTIC_TEST_AZURE_REPOSITORY, and the
+// RESTIC_TEST_AZURE_CONTAINER_SAS environment variables to be set, otherwise this test
+// will be skipped.
+func TestBackendAzureContainerToken(t *testing.T) {
+	vars := []string{
+		"RESTIC_TEST_AZURE_ACCOUNT_NAME",
+		"RESTIC_TEST_AZURE_REPOSITORY",
+		"RESTIC_TEST_AZURE_CONTAINER_SAS",
+	}
+
+	for _, v := range vars {
+		if os.Getenv(v) == "" {
+			t.Skipf("set %v to test SAS/SAT Token Authentication", v)
+			return
+		}
+	}
+
+	ctx, cancel := context.WithCancel(context.TODO())
+	defer cancel()
+
+	cfg, err := azure.ParseConfig(os.Getenv("RESTIC_TEST_AZURE_REPOSITORY"))
+	if err != nil {
+		t.Fatal(err)
+	}
+
+	cfg.AccountName = os.Getenv("RESTIC_TEST_AZURE_ACCOUNT_NAME")
+	cfg.AccountSAS = options.NewSecretString(os.Getenv("RESTIC_TEST_AZURE_CONTAINER_SAS"))
+
+	tr, err := backend.Transport(backend.TransportOptions{})
+	if err != nil {
+		t.Fatal(err)
+	}
+
+	_, err = azure.Create(ctx, *cfg, tr)
+	if err != nil {
+		t.Fatal(err)
+	}
+}
+
 func TestUploadLargeFile(t *testing.T) {
 	if os.Getenv("RESTIC_AZURE_TEST_LARGE_UPLOAD") == "" {
 		t.Skip("set RESTIC_AZURE_TEST_LARGE_UPLOAD=1 to test large uploads")