The move that will see a curtailment of Russian crude purchases comes as traders steer clear of any actions that would violate European sanctions against Russia that go into effect on May 15, although a ban on Russian crude oil does not currently exist.
Still, traders are planning to cut their purchases of the pariah-spawned crude as they try to follow EU sanctions that restrict Russia’s financial activities.
The current EU sanctions—although an outright ban has been discussed without success—do not include crude purchased from Gazpromneft or Rosneft if they are “necessary” to maintaining energy supplies. The ambiguity of the word “necessary”, however, is causing trading houses to wonder whether serving as an intermediary qualifies.
Vitol said earlier this week that it would wind down all its activities involving Russian crude by the end of this year but will diminish significantly in the 2nd quarter. The major commodity trader did not mention May 15 specifically.
Trafigura said it would fully comply with EU sanctions, and anticipated that its traded volumes of Russian crude would be reduced even more after May 15.
Shell, another major crude trader, has already stopped buying Russian crude.
The European Union has been discussing a potential oil embargo on Russia for weeks, but the only thing that seems to have been established is that if one is ever agreed, it would be a gradual wind-down of imports rather than a sudden suspension.
Germany in particular has stated that at this time, it cannot afford to cut itself off from Russian crude oil. Some German lawmakers, however, are pushing the EU to break away from Russian crude with the aim of disrupting Russia’s revenue stream from crude.