Global energy traders Trafigura and Vitol still help to export limited supplies of Russian refined products within the rules of international sanctions, but they are considering whether to resume more trade in Russia’s oil, their CEOs said yesterday.
The two Swiss companies were among the largest lifters of Russian crude oil and refined products before the country’s invasion of Ukraine last February.
By last summer, both firms had already sharply reduced their presence in Russian oil and later sold their interests in Vostok, a major upstream development in Siberia.
“We lift limited refined products within sanctions… our position is under review,” Trafigura’s chief executive Jeremy Weir told the FT Global Commodities Summit in Lausanne, Switzerland.
The US has been openly keen to make sure Russian oil flows continued after the EU embargo took effect on December 5 to prevent price spikes, and has indicated that it views the trade under the G7 price cap mechanism as legal.
The current oil price dip following the collapse of three banks has combined with inflation risks to further lower new investment in oil output, with a tight market looming in the second half of the year as China rebounds from COVID-19 curbs.
The US Treasury recently held some talks with Trafigura to emphasize their stance, sources familiar with the matter said.
“Less than 100,000 barrels per day (bpd) of our traded volume now is Russian business. Will that move up with some slightly stronger guidance? Yes, maybe,” Vitol CEO Russell Hardy told the summit.
Vitol traded 7.4m bpd last year, down from the previous year owing to the company stepping away from more than 90 per cent of the Russian oil business it previously did.
Gunvor’s co-head of trading Stephane Degenne was more circumspect.
“It’s a moving target at the moment. Sanctions can change very quickly. We are staying prudent,” Degenne said.
The chief executive of Mercuria Energy Trading told the summit his company did “minimal if any” Russian oil as the area was not a historical strength for the Swiss firm.
“We may review our stance on Russian oil, but it’s not our natural strength,” Mercuria’s chief executive Marco Dunand said.
With the exit of the big oil traders, the trade in Russian oil has become opaque and shifted largely to start-ups, often registered in Dubai, with unknown owners, Trafigura’s co-head of oil trading Ben Luckock said.
Transport has also moved to ageing tankers run by new, less experienced owners, he added.
Reuters – Noah Browning and Julia Payne