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World’s biggest oil traders are set to cut out Russian oil purchases from the middle of May, report says.

Russia is a major exporter of commodities including oil and gas.
Russia is a major exporter of commodities including oil and gas.

  • The world’s biggest oil traders will cut their purchases of Russian crude from May 15, Reuters reported on Thursday.
  • According to sources the intention is to avoid breaking possible EU sanctions against Russia, the report said.
  • The EU has not yet imposed a ban on Russian oil imports given the region’s heavy reliance on them. 

The world’s largest oil trading houses are set to reduce the amount of oil purchased from Russia from May 15th according to a report from Reuters on Thursday, which quotes anonymous sources. 

Shell has already stopped buying Russian crude oil and Vitol, the world’s largest oil trader, said on Wednesday that it would completely phase out crude oil from the country by the end of 2022, with the likes of Trafigura following suit. 

The source claims that the major oil trading houses are going to cut their purchases in order to avoid breaking the European Union’s sanctions against Russia, although the bloc has not yet officially banned oil imports from the country, the report said. 

At present the EU allows purchases of crude oil from Gazpromneft or Rosneft on the basis that they are necessary to maintain sufficient energy supplies. However, trading houses are confused around the ambiguity of the word ‘necessary’ since they act as an intermediary for these purchases, which has influenced their decision to slash the amount they purchase. 

Furthermore, the EU nations have discussed a potential oil embargo against Russia, while the US banned all energy imports from the country and the UK vowed to completely cut energy imports from Russia by the end of 2022. 

Last week, the EU took its first steps in banning Russian energy imports in response to Putin’s war on Ukraine as the bloc agreed to stop imports of coal completely, starting later this year. 

This was followed by the EU Parliament voting in favor of an outright ban on the import of fossil fuels from Russia as the invasion of Ukraine continued. Although the parliament holds significantly less influence and power than the EU Commission, this may be an indicator of the mood in Europe and a sign of things to come. 

Many European countries rely heavily on Russia for oil imports. Germany, the region’s largest economy, could lose $240 billion, or 6.5% of its annual economic output, over two years if Russian gas were halted, according to a report on Thursday from a group of economic institutions that advise the government.

The EU gets about 3.1 million barrels per day of oil from Russia, which covers around 30% of its needs. Russia supplies more oil to the bloc than the next three biggest suppliers — Iraq, Nigeria and Saudi Arabia — put together. Germany and Netherlands are the main destinations.

Brent crude futures fell 0.97% to trade at $107.72 a barrel on Thursday, while West Texas Intermediate dropped 1.14% to trade at about $103.03 a barrel, after a surprise build in weekly US inventories.

Insider contacted Vitol, Glencore and Gunvor for comment on the story but did not immediately receive a response. 

Read more: An exclusive European multifamily office started exploring blockchain investing in 2017. Its head of funds shares how it made early high-conviction bets on big names in crypto VC — and identifies 2 under-the-radar firms to know.

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