Major global traders are planning to cut crude and fuel purchases from Russian state-controlled oil companies from May 15, sources said, to avoid flouting European Union sanctions against Russia.
The EU has not imposed a ban on Russian oil imports in response to the Ukraine invasion, because some countries, such as Germany, are highly dependent and lack the infrastructure to switch to alternatives.
However, traders are curtailing purchases from Russian energy group Rosneft to comply with the language of existing EU sanctions, which are intended to limit Moscow’s access to the international financial system, the sources said.
The wording of the EU sanctions exempts purchases of crude from Rosneft or Gazpromneft, listed in the legislation, deemed “necessary to ensure critical energy supply” for Europe.
Operators are torn between what “necessary” means, according to the sources. It may cover a refinery that receives Russian crude oil through a pipeline, but it may not cover the buying and selling of Russian oil by intermediaries.
They are cutting back on their purchases to ensure that they comply with the regulations before May 15, the date on which the community restrictions will come into force.
Trafigura, one of the main buyers of Russian oil, told Reuters that it “will fully comply with all applicable sanctions. We anticipate our traded volumes to shrink further from May 15.”
Vitol, another big buyer, declined to comment on the May 15 deadline. Vitol previously said that Russian oil trading volumes “will decline significantly in the second quarter as current-term contractual obligations decline,” and that it will stop trading Russian crude by the end of 2022.
The war and sanctions on Russia have already led some buyers of Russian crude, such as Shell, to stop buying its oil.
Europe’s refiners are increasingly reluctant to process Russian crude. This has already caused disruption to Russian exports, although purchases from India and Turkey have made up for some of the shortfall in supply. Sales to China have also not slowed down.