Top oil merchant Vitol to stop trading Russian crude by end of this year

Vitol Group, the world’s top independent oil trader, intends to completely stop trading Russia-origin crude and products by the end of this year.

Volumes of Russian oil handled by Vitol “will diminish significantly in the second quarter as current term contractual obligations decline,” a Vitol spokesperson said by email. It intends to cease trading crude and products unless directed otherwise, and “we anticipate this will be completed by end of 2022.”

The Geneva-based firm reiterated that it will not enter into any new Russian crude and product transactions. The company has stressed since Russia’s invasion of Ukraine that its purchases have been part of pre-existing contracts.

Vitol’s announcement came after an adviser to Ukrainian President Volodymyr Zelenskiy wrote to the heads of Vitol and other merchant traders, asking them to terminate business dealings with Russia’s fossil fuel industry to cut off the cash flow helping to finance the invasion.

Companies across the world have come under increased pressure from governments and shareholders to sideline Moscow. Oil majors BP Plc, Shell Plc and Exxon Mobil Corp. have announced plans to abandon their stakes in investments related to Russia as they take steps to halt dealings with the nation. Meanwhile, many European banks have curbed trade financing for Russian commodities.

At the government level, while the U.S. has banned Russian energy products, physical exports continue to flow into global markets and many European countries are still allowing imports of it.

Refiners in India and China have also continued to purchase Russian oil cargoes, either directly from Moscow or via traders. India has started raising questions over the profits merchants are making, saying that prices are more expensive than what’s being advertised.

Read more: Oil Traders Selling Pricey Russian Crude Chafe Indian Refiners

Merchant traders have a long history of dealing with troubled regimes. Marc Rich famously fled the U.S. in 1983 to evade prosecution for trading with Iran during the American hostage crisis.

Privately-held trading firms such as Vitol, Glencore Plc and Trafigura Group have continued to load and sell cargoes of Russian crude since the war broke out in late February.

Trading firms sometimes sign long-term or pre-paid contracts with producers like Russia’s Rosneft PJSC to purchase and load a certain amount of oil every month, and also buy and sell cargoes on a daily basis in the spot market. Glencore and Trafigura said earlier this week they would continue to honor their long-term deals. Glencore, though, said it wasn’t starting any new business with Russia, while Trafigura said it had reduced Russian volumes.

Last month, Vitol Chief Executive Officer Russell Hardy said the company had stopped its spot business in Russia, but was still executing long-term contracts, and was still waiting to make a decision on whether to divest its stake in Rosneft’s Vostok oil project.

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