World’s Top Oil Merchant Vitol Winds Down Trading Russian Crude 

Vitol Group, the world’s top oil merchant, will wind down Russian crude trade in the second quarter and cease all trading by the end of the year, according to Bloomberg. This follows the Ukrainian government’s request for the world’s largest energy traders to stop handling Russian energy products. 

Russian crude trading “will diminish significantly in the second quarter as current term contractual obligations decline,” a Vitol spokesperson said. Trading of all crude products will cease “by the end of 2022,” the spokesperson added.

Vitol’s announcement comes after Oleg Ustenko, economic adviser to Ukrainian president Volodymyr Zelensky, wrote a letter to Geneva-based commodities trading firm, along with others, including Trafigura, Glencore, and Gunvor, at the end of March, to halt trading with Russia immediately since export revenues help fund Moscow’s war machine. 

“The fact is that traders are trading and they are helping Russia to receive this blood money,” Ustenko recently told FT.

“They are in this cycle of financing war crimes and genocide against Ukrainian citizens.”

Data from the Bruegel and the International Institute of Finance think-tanks estimate that Russian exports of crude oil and natural gas to Europe provide Moscow with $850mln per day. 

Russian oil and gas aren’t directly impacted under EU sanctions against Russia for its invasion of Ukraine, though shipping companies, banks, insurers, and refiners are self-sanctioning them. In the US, the Biden administration has banned Russian energy products. Still, refiners in India and China continue to purchase Russian crude products… at record discounts…

Trading firms usually have long-term or pre-paid contracts with producers, such as Russia’s Rosneft PJSC, to purchase a certain amount of oil every month. Glencore and Trafigura said last week they would honor their long-term deals. Glencore said it wasn’t expanding trading operations with Russia, while Trafigura said it reduced volumes of Russian crude. 

From the start of the war until the end of March (a little more than a month), Vitol, Glencore, Trafigura, and Gunvor discharged 33 oil tankers of Russian crude, according to Refinitiv data by Global Witness. 

Meanwhile, BP Plc, Shell Plc, and Exxon Mobil Corp have divested their energy asset stakes in Russia. 

Only the Western world has distanced itself from Russian crude as China begins trading yuan for Russian coal and oil. Moscow is also considering a rupee-ruble payment system for Indian oil traders. This could be the birth of a new economic order (for more on that, read: “Bretton Woods III? China Begins Buying Russian Coal And Oil In Yuan”).