Trading companies, however, stopped buying from Russian energy group Rosneft as they sought to comply with language in existing EU sanctions aimed at limiting Russia’s access to the international financial system.
Major global trading companies plan to reduce purchases of crude oil and fuel from Russian state -controlled oil companies as early as May 15, sources said, to avoid violating European Union sanctions on Russia.
The EU did not impose a ban on Russian oil imports in response to Russia’s invasion of Ukraine, as some countries like Germany are heavily dependent on Russian oil and lack the infrastructure to switch to alternatives. [nL5N2VO3PE]
Trading companies, however, stopped buying from Russian energy group Rosneft as they sought to comply with language in existing EU sanctions aimed at limiting Russia’s access to the international financial system, the source said.
The wording of EU sanctions excluding oil purchases from Rosneft or Gazpromneft, which are listed in the legislation, is considered “essential” to ensure European energy security.
Traders are struggling with the meaning of “indispensable”, the source said. It may cover oil refineries that receive Russian oil through captive pipelines, but it may not cover the purchase and sale of Russian oil by intermediaries. They cut purchases to ensure they comply before May 15, when EU sanctions take effect.
The entry of Russian state -owned infrastructure firm Transneft which owns major ports and pipelines will add another layer of complexity to any future sales.
Trafigura, Russia’s main oil buyer, told Reuters it “will fully comply with all restrictions imposed. We expect our trading volume to be further reduced from May 15.”
Vitol, another big buyer, declined to comment on the May 15 deadline. Vitol previously said Russia’s oil trade volume “will decline significantly in the second quarter as current -term contract obligations decline,” and that it will halt Russia’s oil trade by the end of 2022.
The war and sanctions on Russia have caused many western buyers of Russian crude oil such as Shell to stop buying new spots.
Referees in Europe are becoming increasingly reluctant to process Russian crude oil. That has disrupted Russian exports, although purchases by India and Turkey have replaced some weaknesses. Sales to China also continued non -stop.
Total Rosneft and Gazpromneft accounted for 29 million barrels, or nearly 1 million barrels per day (bpd) in April, which is more than 40% of total Ural crude oil exports from Russia’s western ports in April, according to the loading plan.
The International Energy Agency said on Wednesday Russia’s oil supply may drop 3 million barrels a day starting in May.
Rosneft declined to comment. Gazpromneft did not immediately respond to Reuters’ request for comment. Other Russian oil buyers, Gunvor and Glencore, declined to comment on the impact of the deadline.
Energy trading firms face compliance and reputational risks from the current Western blockade raft. They need to carefully research which entities they can pay for as well as the nationality of their employees. In addition, the lack of direct bans complicates the termination of existing contracts.
“All companies sit down with their lawyers to think about what they can and can’t do,” a senior trade source said. “It’s not clear what this means for the entire supply chain, for shippers, insurers,” adding that his firm sees implications for non -state oil sales.
“Lawyers are partying about this. Where there is uncertainty, companies will back down. Russian oil flows will decrease significantly in the future.”
(This story has not been edited by NDTV staff and is automatically generated from a syndicated feed.)
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