The merchant turned his back
Vitol Group, the world’s leading private oil trader, will cease trading in Russian crude oil and products by the end of the year, according to a source with knowledge of the market situation at CNN. The Dutch energy and commodities trading company will not be involved in any new Russian crude oil transactions, the source said.
Vitol’s revenue nearly doubled last year to $279 billion as global oil demand rebounded as economies reopened following COVID-19 lockdowns. According to the company’s website, Vitol traded 7.6 million barrels of crude oil and other oil products per day in 2021.
This is more than Russia’s daily crude oil exports, which the IEA estimates at around 4.7 million bpd in 2021. Of that, about 2.4 million bpd goes to Europe. Vitol confirmed to Bloomberg about its decision to stop trading in Russian oil, but did not comment further.
Nhà máy lọc dầu tại cảng Rotterdam thuộc sở hữu của Vitol Group. (Ảnh: Vitol Group).
Trafigura, another major Russian oil buyer, told Reuters that it “will fully comply with all applicable sanctions. Trafigura anticipates a further decrease in trading volumes from May 15”.
Oil trading businesses face compliance and communication risks due to sanctions from the West. These businesses must check to whom they can be paid, as well as the nationalities of their employees. Moreover, existing contracts are also affected because of ambiguous legality when Europe does not completely ban trading activities.
“All companies are sitting down with lawyers to confirm what can and can’t be done,” a senior source told Reuters.
“It’s not clear what this means for the entire supply chain, for shippers or insurers,” the source said, adding that his company is looking at the impacts on oil sales. private.
“The lawyers are celebrating on this. When there is uncertainty, companies step back. The flow of Russian oil will decrease significantly in the future.”
Huge discount
Since Russia launched a special military operation in Ukraine in February, the US, UK, Canada and Australia have all announced a ban on Russian oil.
Large companies including Shell, TotalEnergies and Neste have also stopped buying crude oil from Russia, or announced to stop importing oil by the end of 2022. The embargo from the West also applies to banks, traders, shippers. and insurance companies make it difficult to import oil.
As Russian oil loses its appeal to many buyers, the price of oil is discounted more and more in international markets. Currently, the price of Russian Urals oil is 34 USD/barrel lower than Brent oil.
The International Energy Agency (IEA) estimated on April 13 that Russia’s oil sales would fall by 1.5 million bpd in April, and could fall another 3 million bpd in May as people push back. buy back.
“While some buyers, especially in Asia, have increased their purchases of heavily discounted Russian oil, traditional buyers are gradually cutting back,” the agency said. At the moment, there is no sign of increasing export volume to China.”
There are signs that the European Union will embargo Russia’s oil. Last week, European Commission President Ursula von der Leyen said the Union was considering an oil embargo in a new round of sanctions.
The impact of this extension of the embargo is an increase in oil prices globally as buyers scramble for alternative supplies. According to the IEA, Russia is the world’s second-largest crude exporter, after Saudi Arabia, and accounted for 14% of global supply last year.
The international benchmark Brent crude oil price spiked in early March, briefly surpassing $139 a barrel, but then fell to $107.
A joint release of 240 million barrels by the United States and IEA members could help lower prices and make up for shortfalls in crude supplies.
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