Top oil trader to ditch Russian crude
The world's biggest independent oil trader, Vitol, expects to stop trading Russian crude by the end of this year, Bloomberg reported on Tuesday.
Vitol “intends to cease trading Russian origin crude oil and product, unless directed otherwise,” Bloomberg quotes an email from the company spokesman, which goes on to say that “volumes of oil will diminish significantly in the second quarter as current-term contractual obligations decline, and we anticipate this will be completed by end of 2022.” The Geneva-based company also says it will not enter into any new Russian oil transactions.
Vitol's announcement follows a demand made by the Ukrainian government in late March that the world’s four largest energy traders - Vitol, Trafigura, Glencore and Gunvor – stop handling Russian crude. According to the Financial Times, Trafigura said it was now purchasing lower volumes of Russian oil, Gunvor cited legally-binding existing trading contracts, and Glencore pledged not to enter any new trade in Russian commodities.
Oil trading companies form an essential part of the infrastructure that allows oil and gas to be distributed around the world. India bought several million barrels of Russian oil on spot markets from Vitol in March. Russian oil and gas are not directly under EU sanctions, however, according to the Financial Times, some refiners, banks and shipping companies shun Russian energy over reputational concerns.
According to Russia’s National Energy Institute, Vitol’s decision to stop trading Russian oil will not have a significant effect on the country’s oil industry as Vitol only handles a small proportion of Russian crude.
“The Vitol Group usually buys up to five million tons of Russian oil per year. To put that in perspective, Russia produces about 550 million tons of oil per year, about 45% of which is supplied to foreign markets,” the Institute’s deputy director Alexander Frolov told Russian media on Wednesday. If Vitol stops selling Russian oil, he added, Chinese companies will buy the volume.
For more stories on economy & finance visit RT's business section
