Julia Payne

LAUSANNE, Switzerland (Reuters). During March, Western companies began to snub Russia’s market. Ship tracking data, shipping sources, and traders indicate that Trafigura and Vitol, commodities traders, helped Russia keep its oil flowing through its Baltic, Black Sea, and Black Sea ports.

The two Swiss-based trading firms have made long-term arrangements with Rosneft the Russian oil giant. These agreements were reached before Moscow’s invasion in Ukraine, which triggered an avalanche of Western sanctions.

According to Refinitiv Eikon ship tracking data, and other sources, both companies have combined to load 22 cargoes with Urals crude oil. This is equivalent to 16.7 million barrels or 2.32 million tonnes. In February, they shipped 1.84million tonnes and 1.80million in January.

Although the bulk of oil purchased by the companies comes from Rosneft and a significant portion of crude Vitol handled via Russian ports is from Kazakh producers, the majority of their oil comes from Rosneft.

These transactions have not been in violation of any West restrictions. Many European countries are continuing to purchase Russian gas, even though some Western businesses like Shell (LON:), BP (NYSE;) have stopped buying Russian oil from the spot market.

Glencore, Gunvor, and Petraco, other Swiss traders, loaded Russian crude oil in March. However, their volumes were lower than previous months according to information and shipping data.

This loading data gives an indication of the potential impact of the Ukraine conflict on the world oil market. It is a result of surging prices and volatility, as well as the risk of sanctions making it harder to trade.

Trafigura will load 12 Urals cargoes in March according to shipping data from March 25. This is Trafigura’s busiest month ever since June, when Trafigura also loaded 12. According to data and trading source, Trafigura’s average monthly cargo load from February 2021 until February 2021 was 8.3 Cargoes.

Vitol’s 10 cargoes are on par with January and February, and roughly in line with the 9.6 average since Rosneft began in October. For the first nine month of 2021, its monthly average was 5.1 cargoes.

Benchmark’s highest monthly level since 2008 was attained this month due to concern about U.S. and European restrictions on Russian oil imports. Brent oil has seen record-breaking prices for Urals crude.

TAKE PRECAUTIONS

Trafigura said that Vitol had already fulfilled their existing contracts. They also stated to Reuters that they have not signed any new Russian oil agreements since the Ukraine conflict. Moscow refers to it as a special operation. The volumes of Russian oil that they had been purchasing was not disclosed by them.

Three sources confirmed to Reuters that Trafigura’s long-term contract is in place at least through next year. Vitol’s deal runs at most until October of this year. Sources said that the contracts provided flexibility for the companies regarding how much oil each month can be purchased.

The agreements have been previously rejected by both companies.

Trafigura spokeswoman said that “We continue to adhere to our legal obligations under existing term arrangements entered into prior the war in Ukraine.”

According to the spokesperson, “We will take all precautions to ensure that we adhere in full to applicable regulations as well as sanctions” and they continue to engage customers and governments in order to understand and supply the commodities and energy needed in severe disruptions in the commodities market.

Although deals for April remain to be struck, Trafigura and Vitol have already secured eight cargoes each for the 10 first days of the month. These companies also offer Russian oil, known as ESPO Blend. This Russian oil is shipped via Asian ports in May.

Rosneft was one of several Russian energy firms that the European Union had banned from transactions on March 15. However, Brussels granted a 2-month cooling off period to contracts that had been signed and exempted purchases not “strictly required”.

European oil refiners currently study what EU’s new measures are for Russian crude oil purchases. Some are also looking to purchase oil from other countries while they wait for clarifications, traders stated.

According to oil traders, Trafigura said that they expect Vitol and Trafigura to continue with their crude purchase from Rosneft between April and May. However, this may not be at the volume initially planned due to the possible difficulties selling cargoes to EU buyers.

NO NEW BUSINESS

TotalEnergies and Shell are the big western oil companies. Exxon Mobil (NYSE:) All cargoes loaded with Russian oil were transported by Finland’s Neste and NYSE:

The majority were placed in March, before the invasion. But Shell took a Trafigura oil cargo on March 4, at an extremely low price. Shell had promised to stop its Russian operations a few days before the invasion and then apologised after being criticized.

Some Urals cargoes that were due to arrive at Western companies in the second quarter of March are now cancelled. Shell, Neste and TotalEnergies stated that they had stopped any new spot oil purchases from Russia. Exxon has not yet responded to my request for comment.

Petraco, a trading house, told Reuters that the Russian oil they have loaded or were due to load was purchased before the invasion of Ukraine and that the company strictly adheres to government policies.

Petraco is currently in a long-term arrangement with Neftisa, a Russian oil producer. A short-term contract has been signed with Zarubezhneft by the state. Both contracts expire at the end March.

Gunvor, Glencore and Rosneft have Urals Purchase Tenders. The contracts run from October through March and the bulk of Russian crude was loaded under them. Traders said that neither is likely to load Rosneft crude oil in April.

Gunvor stated to Reuters that Russia will not be doing any business, but a Glencore source said the company was handling only oil from pre-invasion contract contracts.

DESTINATION ASIA

According to March’s loading schedule, Russia will export 6.2 million tonnes of Urals crude oil from its Baltic ports. Some 2.28 million through Novorossiisk (Black Sea), according to Russia.

The destination for some cargoes might change but the overall volume of Russian exports to March will likely remain roughly in line with the plans of Russia before it invaded.

Shipping data indicates that most of March’s oil shipment is headed to Europe. About a third will go to India or China.

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 and sent to Asia, given the reluctance of EU buyers to take Russian crude.

Litasco (the Swiss trading arm that Russia’s Lukoil has in its portfolio) is expected to have one of the biggest shares of Russian crude seaborne exports for March. There are 1.5 million tonnes of cargo due to be loaded. Litasco did not respond to our request for comment.

China’s Unipec was the trading arm for Asia’s largest refiner Sinopec. Unipec declined to comment.

According to traders, several Russian crude cargoes that were due for loading at the end March didn’t have any tankers yet. This raises doubts about whether or not the loadings will occur.

Three trading sources confirmed that while Swiss firms are loading Russian oil into their trading vessels, they do not have all the tankers with firm destinations.

According to one Urals crude oil trader, “It is one thing to load the oils and another to find buyers.”