# Commodities trading houses help keep Russian oil flowing Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-03-25 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Commodities traders aiding Russia's oil flows despite Meta Description: Discover how Trafigura and Vitol are maintaining oil supply from Russian ports amidst Western sanctions, reshaping the global oil market. URL: https://financedigest.com/commodities-trading-houses-help-keep-russian-oil-flowinghtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-03-25t154455z2lynxnpei2o0rbrtroptp4ukraine-crisis-oil-traders-1736815935452-compressed.jpg) By Julia Payne LAUSANNE, Switzerland (Reuters) – Commodities traders such as Trafigura and Vitol have helped keep Russia’s oil flowing through its Baltic and Black Sea ports in March, when some Western firms started to snub the market, according to ship tracking, traders and shipping sources. Both Swiss-based trading houses have long-term deals with state-run Russian oil giant Rosneft to load crude under agreements struck before Moscow’s invasion of Ukraine triggered a wave of Western sanctions this month. So far in March, the two companies combined have loaded 22 cargoes of Urals crude, equivalent to 2.32 million tonnes of oil or 16.7 million barrels, according to Refinitiv Eikon ship [tracking data](https://www.financedigest.com/auditing-in-cyber-how-organisations-can-keep-track-of-their-data.html "AUDITING IN CYBER: HOW ORGANISATIONS CAN KEEP TRACK OF THEIR DATA") and sources. They shipped 1.84 million tonnes in February and 1.80 million in January. The bulk of the [oil the two companies](https://www.financedigest.com/exxon-sues-eu-in-move-to-block-new-windfall-tax-on-oil-companies.html "Exxon sues EU in move to block new windfall tax on oil companies") buy comes from Rosneft, though a large chunk of the crude Vitol handles via Russian ports comes from Kazakh producers. The purchases have not breached any restrictions imposed by the West and many European countries continue to buy Russian gas – even if some Western [firms](https://www.financedigest.com/pizza-firm-dp-eurasia-delivers-profit-rise-evaluating-russian-business.html "Pizza firm DP Eurasia delivers profit rise, evaluating Russian business") such as Shell and BP have stopped buying Russian oil in the spot market. Other Swiss-based traders Glencore, Gunvor and Petraco loaded Russian crude in March, though the volumes they took were slightly lower than in previous months, according to shipping data and information from traders. The loading data offers an early indication of how the Ukraine conflict may be reshaping the global [oil market as surging prices](https://www.financedigest.com/oil-prices-stable-heading-for-weekly-gain.html "Oil prices stable, heading for weekly gain"), volatility and the threat of sanctions make it more difficult to trade. With 12 cargoes of Urals to be loaded in March, according to the shipping data as of March 25, Trafigura is having its busiest month since June when it also loaded 12. Its monthly average since the start of 2021 through February was 8.3 cargoes, [according to the data and trading](https://www.financedigest.com/u-s-ukraine-agree-to-launch-talks-to-upgrade-2008-trade-accord.html "U.S., Ukraine agree to launch talks to upgrade 2008 trade accord") sources. Vitol’s 10 cargoes is on a par with February and January and broadly in line with an average of 9.6 since its [deal with Rosneft started in October](https://www.financedigest.com/citi-halted-financing-for-trafiguras-nickel-deals-in-october-bloomberg.html "Citi halted financing for Trafigura’s nickel deals in October – Bloomberg"). Its monthly average for the first nine months of 2021 was 5.1 cargoes. Benchmark Brent [crude hit its highest level since 2008 this month on concerns](https://www.financedigest.com/oil-near-flat-as-us-crude-stock-draw-contends-with-economic-concerns.html "Oil near flat as US crude stock draw contends with economic concerns") about U.S. and European bans on [Russian oil](https://www.financedigest.com/oil-gains-as-russian-supply-cuts-temper-concerns-over-rate-hikes-high-stocks.html "Oil gains as Russian supply cuts temper concerns over rate hikes, high stocks") imports. Urals crude, meanwhile, has been trading at [record discounts to Brent prices](https://www.financedigest.com/biggest-uk-house-price-fall-recorded-since-financial-crisis.html "Biggest UK house price fall recorded since financial crisis"). TAKING PRECAUTIONS Trafigura and Vitol told Reuters they were fulfilling existing contracts and had not struck any new deals for [Russian oil](https://www.financedigest.com/oil-prices-rise-after-opec-keeps-output-steady-russian-price-cap-imposed.html "Oil prices rise after OPEC+ keeps output steady, Russian price cap imposed") since the Ukraine conflict, which Moscow calls a special operation, started on Feb. 24. They did not [comment on the volumes of Russian oil](https://www.financedigest.com/oil-dips-after-fed-comments-us-crude-stock-build.html "Oil dips after Fed comments, US crude stock build") they have been buying. While the long-term contracts are not public, three [sources told Reuters that Trafigura has a deal running at least](https://www.financedigest.com/exclusive-foxconn-woes-could-hit-at-least-30-of-iphone-nov-shipments-from-china-plant-source.html "Exclusive: Foxconn woes could hit at least 30% of iPhone Nov shipments from China plant – source") until next year while Vitol’s runs until at least October this year. The sources said the contracts gave the companies plenty of flexibility on how much oil they can buy each month. The companies have previously declined to comment to Reuters about the terms of the agreements. We are continuing to comply with our legal obligations arising under existing term agreements [entered into prior to the war in Ukraine,” a Trafigura](https://www.financedigest.com/trafigura-enters-3-billion-loan-to-supply-germanys-sefe-with-gas.html "Trafigura enters billion loan to supply Germany’s Sefe with gas") spokesperson said. We are taking every precaution to ensure we comply in full with applicable regulations and sanctions and we continue to engage with customers and governments to [understand their requirements and provide the commodities](https://www.financedigest.com/a-brits-guide-to-understanding-commodity-trading.html "A Brit’s Guide to Understanding Commodity Trading") and energy they need in severely disrupted commodities market,” the spokesperson said. Deals for April are still being struck but so far Trafigura has lined up eight cargoes for the first 10 days of the month and Vitol has six. The companies are also [offering Russian oil](https://www.financedigest.com/factbox-u-s-offers-new-details-on-plan-to-cap-russian-oil-prices.html "Factbox-U.S. offers new details on plan to cap Russian oil prices") known as ESPO Blend, which is exported via Asian ports, in May. The [European Union](https://www.financedigest.com/explainer-why-malaysia-is-considering-a-ban-on-palm-oil-exports-to-the-european-union.html "Explainer-Why Malaysia is considering a ban on palm oil exports to the European Union") banned transactions with several Russian energy companies including Rosneft on March 15. However, Brussels gave a two-month wind-down period for contracts already agreed and excluded purchases that were “strictly necessary”. European oil refiners are currently [studying what the new EU measures](https://www.financedigest.com/national-cinemedia-releases-first-cinema-attention-measurement-study-conducted-by-lumen-in-collaboration-with-dentsu.html "National CineMedia releases first cinema attention measurement study, conducted by Lumen in collaboration with dentsu") mean exactly for purchases of Russian crude and some are looking for oil from elsewhere while awaiting clarification, traders said. [Oil traders said they expected Trafigura and Vitol to press ahead with crude](https://www.financedigest.com/oil-falls-as-earthquake-impact-on-crude-eases-rate-hike-fears-rise.html "Oil falls as earthquake impact on crude eases, rate hike fears rise") purchases from Rosneft in April and May, but possibly not at the volumes initially planned given the potential difficulties in selling the cargoes to EU buyers. NO NEW BUSINESS [Big Western oil](https://www.financedigest.com/big-oil-doubles-profits-in-blockbuster-2022.html "Big Oil doubles profits in blockbuster 2022") companies TotalEnergies, Shell and Exxon Mobil – as well as Finland’s Neste – all loaded cargoes of Russian oil in March. Most were early in the month and ordered before prior to the invasion, though Britain’s Shell snapped up a heavily [discounted cargo of Russian oil from Trafigura on March](https://www.financedigest.com/u-s-oil-exports-to-europe-hit-record-in-march-on-steep-discounts.html "U.S. oil exports to Europe hit record in March on steep discounts") 4\. Shell had pledged a few [days earlier to end](https://www.financedigest.com/amazon-to-lay-off-staff-in-u-s-canada-and-costa-rica-by-end-of-day.html "Amazon to lay off staff in U.S., Canada and Costa Rica by end of day") its operations in Russia and later apologised for the trade after a hail of criticism. Some cargoes of Urals due to be loaded by the Western firms in the second half of March have now been cancelled. Shell, Neste and TotalEnergies said they have stopped new spot purchases of Russian oil. Exxon did not immediately respond to a request for comment. [Trading house Petraco told Reuters the Russian oil](https://www.financedigest.com/ing-toughens-oil-and-gas-policy-to-include-trade-finance-midstream.html "ING toughens oil and gas policy to include trade finance, midstream") it has loaded, or was due to load, was contracted prior to the Ukraine invasion and that it strictly complies with government policies. Petraco has a long-term contract with Russian [oil producer Neftisa that runs until the end](https://www.financedigest.com/oil-set-to-end-turbulent-2022-modestly-higher.html "Oil set to end turbulent 2022 modestly higher") of 2022 and a short-term contract with state-controlled Zarubezhneft that expires at the end of March, according to traders. Gunvor and Glencore both have Urals purchase tenders with Rosneft [running from October through March this year and most of the Russian](https://www.financedigest.com/russian-services-activity-shrinks-for-third-month-running-in-dec-pmi.html "Russian services activity shrinks for third month running in Dec -PMI") crude loaded fell under those contracts. Neither is expected to load any Rosneft oil in April, traders said. Gunvor told Reuters it won’t do any new business with Russia while a source [close to Glencore said it was only handling oil](https://www.financedigest.com/global-stocks-close-in-on-4-week-highs-oil-rises-on-hopes-of-soft-landing.html "Global stocks close in on 4-week highs, oil rises on hopes of ‘soft landing’") from pre-invasion contracts. DESTINATION ASIA? Russia plans to export 6.2 million tonnes of Urals crude from its Baltic ports and some 2.28 million via Novorossiisk in the Black Sea, according to the loading schedule for March. While the ultimate destination of some cargoes may change, the total volume of Russian exports for March is expected to remain broadly in [line with its plans](https://www.financedigest.com/birmingham-lines-up-post-brexit-housing-plan-with-a-little-help-from-its-friends-in-china.html "Birmingham lines up post-Brexit housing plan, with a little help from its friends in China") before the invasion. Most of the oil being shipped in March is due go to Europe, with about a third [heading to India and China](https://www.financedigest.com/first-foreign-covid-vaccines-head-to-china-from-germany.html "First foreign COVID vaccines head to China from Germany"), shipping data shows. However, traders said they expected about half the [oil due to go to the Amsterdam-Rotterdam-Antwerp refining and storage hub would probably be offloaded onto bigger tankers](https://www.financedigest.com/oil-spills-and-near-misses-more-ghost-tankers-ship-sanctioned-fuel.html "Oil spills and near misses: more ghost tankers ship sanctioned fuel") and sent to Asia, given the reluctance of EU buyers to take Russian crude. Litasco, the Swiss trading arm of Russia’s Lukoil, has one of the [largest shares of Russian seaborne crude exports](https://www.financedigest.com/at-chinas-largest-trade-fair-exporters-worry-about-world-economy.html "At China’s largest trade fair, exporters worry about world economy") in March with some 1.5 million tonnes due to be loaded, according to shipping data. Litasco declined to comment. China’s Unipec, the trading arm of Asia’s largest refiner Sinopec, took several Urals cargoes in March, tracking and trading sources said. Unipec did not respond to a request for comment. Traders said several cargoes of Russian crude due to be loaded at the end of March did not have tankers lined up yet, raising doubts as to whether the loadings will happen. While Swiss trading [firms have been loading Russian oil](https://www.financedigest.com/uk-oil-gas-firms-to-leave-years-worth-of-output-in-ground-with-tax-hikes-report.html "UK oil, gas firms to leave year’s worth of output in ground with tax hikes-report"), not all of their tankers have firm destinations at this point, three trading sources said. “It’s one thing to load the oil, another to find the buyer,” one Urals crude trader said. (Reporting by Julia Payne and Reuters reporters; Editing by David Clarke) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---