Despite U.S. sanctions, oil traders help Russian oil reach global markets

Despite U.S. sanctions, oil traders help Russian oil reach global markets

Transcript¹

Since the U.S. imposed sanctions in March, American refineries² have stopped welcoming tanker³ ships laden⁴ with Russian oil. But Russian crude exports to other parts of the world have been increasing.

The American sanctions aim to cut the hard-currency revenues that feed the Russian economy and its war effort: 36% of Russian federal budget revenues came from oil and gas last year, according to Russia's Finance Ministry⁵. But while the U.S., Canada, the U.K. and Australia have formal embargoes⁶, most countries around the world don't, and oil refineries from India to Spain are still purchasing Russian crude.

A drop-off in Russian oil exports was minimal⁷ and has strongly rebounded⁸ in April, despite fears of supply shortages driving recent high oil prices, says Matt Smith, lead oil analyst⁹ at Kpler, a data analytics firm. Russia has earned more than $12 billion from oil exports since its invasion of Ukraine, according to the Centre for Research on Energy and Clean Air, an international research group. A month into the U.S.-led sanctions, the flow of Russian petroleum¹⁰ to the world, as well as the revenues from it, remains¹¹ strong.

Much of this oil trade is facilitated by a highly efficient and sometimes controversial group of middlemen: oil trading firms. Oil traders act as global matchmakers between the countries and companies that pump oil and the refineries that process crude into gasoline and other fuels.

"We're merchants," says Saad Rahim, chief economist¹² of Trafigura, a commodity trading firm that handles about 7 million barrels of oil and products a day. "In a sense, it's the oldest business in the world."

Trafigura is one of a handful of companies in Switzerland that handles about a quarter of the world's oil each day. For decades, these firms have sourced much of their oil from Russia. About 80% of Russian commodities are traded in Switzerland, according to a 2021 report from the Swiss Embassy in Moscow. Some oil traders also have stakes in Russia's state oil company and its assets, including in a megaproject in an environmentally fragile part of the Russian Arctic.

In the weeks following Moscow's invasion of Ukraine, many trading firms have said they are reviewing their holdings in Russia. Yet traders continue to facilitate the flow of Russian oil and, last month, even increased their Russian oil trading activity, says Oliver Classen, spokesperson for Public Eye, a commodity trading watchdog group in Switzerland.

"We're just looking at data that suggests that key traders working out of Switzerland have significantly stepped up their activities in the war month of March," Classen says.

Some of the trading firms that handle the most Russian oil say they're legally bound to fulfill¹³ preexisting contracts to lift Russian crude and are complying with all sanctions. Trafigura and the commodity trading firm Gunvor tell NPR that they condemn¹⁴ the war in Ukraine. Another trader, Glencore, directed NPR to its website, where it also condemns¹⁵ the war. The firm Vitol announced last week that it would stop trading Russian oil by the end of this year.

But for now, the traders' continued loadings have big implications for Russia's ability to wage war in Ukraine, says Alexandra Gillies, an adviser¹⁶ at the Natural Resource Governance Institute, an organization focused on extractive industries.

"In this situation," Gillies says, "they're offering a financial lifeline to Vladimir Putin and his government."

March was busy for traders loading Russian crude

The International Energy Agency has predicted that starting this month, global markets could lose as much as 3 million barrels a day of Russian oil because of sanctions and skittish¹⁷ buyers. The European Union says it is considering oil sanctions. But with the current limited sanctions led by the U.S. in place, oil traders in London and Geneva tell NPR that while some Russian crude is getting rerouted, so far the majority of cargoes¹⁸ are making their way to market.

Traders manage a complex global web of oil, says Giacomo Luciani, an energy economist and professor at the Paris Institute of Political Studies, or Sciences Po. "They're middlemen, so their job consists in matching the most appropriate crude with the most appropriate refinery," he says. Crude oil varies based on qualities such as weight and sulfur¹⁹ content. "It's like wine. Each crude oil is different."

Across the supply chain, traders are valued for their logistical know-how²⁰. "They do not own tankers²¹, but they know where the tankers are, they know how to rent a tanker," Luciani says.

Since the invasion of Ukraine, these trading companies have been putting their know-how to work to help keep oil flowing out of Russia. A recent report from Reuters using shipping²² data shows that March was Trafigura's busiest month of loading cargoes of Russian oil since June 2021. Vitol maintained about the same level of Russian cargoes in March as it did in January and February, and both these companies are still lining²³ up tankers to lift Russian oil this month and next, according to Reuters.

Rahim, of Trafigura, says because the traders aren't sending Russian oil to the U.S. or other countries that have sanctioned Russian oil, their business is legal. "The barrels are not sanctioned that any of the trading houses are touching²⁴ today," Rahim says. "We have to ensure that that flow continues."

Commodity traders have a checkered²⁵ history

For decades, the commodity traders in Switzerland have been deeply intertwined with Russia, Luciani says.

Gunvor was co-founded by Putin ally Gennady Timchenko. He sold his Gunvor shares in 2014, just before the U.S. placed sanctions on him following Russia's invasion of Ukraine and annexation²⁶ of Crimea. Gunvor has a minority, noncontrolling stake in an oil products terminal on the Baltic Sea. A Gunvor spokesperson said in an email to NPR, "The terminal is being reviewed for divestiture²⁷."

Vitol and Trafigura each have minority stakes in state oil producer Rosneft's Vostok Oil project in the Russian Arctic. Both companies have announced that they are reviewing their stakes.

Glencore, which owns a small stake in Rosneft as well as a part of a Russian state aluminum²⁸ project, says on its website that "there is no realistic way to exit these stakes in the current environment."

Litasco, a Swiss oil trading company owned by Russian state oil company Lukoil, and Petraco, a Swiss trader that also has contracts for Russian production, did not reply to requests for comment.

But the traders' ties to Putin's Russia only add to persistent²⁹ ethical³⁰ questions that have long haunted the industry, going back to the so-called godfather of oil trading, Marc Rich. Rich, the founder³¹ of Glencore, was a notorious sanctions-buster, trading oil with Ayatollah Ruhollah Khomeini's Iran and apartheid South Africa. He was indicted³² in the 1980s for tax evasion³³, wire fraud and other crimes, and he fled to Switzerland.

In recent years, commodity trading companies have faced renewed scrutiny³⁴ for their oil deals. In 2020, Vitol admitted to paying millions of dollars in bribes³⁵ for oil contracts in Brazil, Ecuador and Mexico, and it paid over $135 million to resolve a U.S. Justice Department probe. In 2019, Swiss courts found Gunvor criminally liable for bribery³⁶ in oil deals in the Republic of Congo and Ivory Coast. Glencore is currently involved in corruption³⁷ probes in the U.S., the U.K. and Brazil, and it has set aside $1.5 billion for settlements this year for what its chief executive has described as historic misconduct. Brazilian authorities have named Trafigura in investigations³⁸ into oil deals, but the company denies the allegations.

Rahim says new transparency measures around payments to foreign governments and a move away from agents have changed the culture of the trading industry: "People probably who were in this industry even in the early 2000s would probably not recognize kind of how it is today."

As for the current limited sanctions on Russian oil, Rahim says trading firms are constantly monitoring new regulations to figure out what is allowable. "Across the physical trading houses, I'll tell you that probably the busiest people at those companies are the people in compliance³⁹ right now," he says.

"A duty of care"

For oil traders, Russia is a key, and not easily replaceable, source in global energy markets. At the recent FT Commodities Global Summit in Lausanne, Switzerland, CEOs of Vitol and Gunvor said that Russia supplies about half of Europe's diesel⁴⁰. Europe now faces diesel shortages, and Rahim says if trading firms were to suddenly stop handling Russian barrels, there would be many more energy shortages all around the world. "We have sort of a, almost a duty of care to make sure that the system maintains itself," he says.

In late March, the economic adviser to Ukrainian President Volodymyr Zelenskyy wrote a letter to the heads of Vitol, Trafigura, Glencore and Gunvor. According to the Financial Times, which first reported the letter, Oleg Ustenko asked the companies to stop trading Russian energy products, which are financing Putin's invasion.

For the trading companies, it is getting harder to find ships willing to pick up cargoes of Russian crude and find banks to provide letters of credit. But while Vitol has announced its plans to stop trading Russian oil by the end of the year, for now it and other key traders are continuing to operate in Russian ports. A Trafigura spokesperson told NPR that the company expects to load lower volumes after May 15. Trading arms of international oil companies like Shell and TotalEnergies also still have long-term contracts to lift Russian oil.

Gillies, of the Natural Resource Governance Institute, says leaving the oil traders to make their own decisions about pulling out of Russia is a mistake. "Commodity traders for years have shown a willingness to do business with almost everybody," Gillies says. "And so it's not an ideal situation to have these commodity trading companies making those policy decisions about whether they should be continuing to buy Russian oil or not."

"These are some of the most economically important transactions to the Russian state right now," she adds, "so any steps to make those transactions more difficult, I think, is really important."

1 transcript   

n.抄本，誊本，副本，肄业证书

参考例句：

• A transcript of the tapes was presented as evidence in court.一份录音带的文字本作为证据被呈交法庭。
• They wouldn't let me have a transcript of the interview.他们拒绝给我一份采访的文字整理稿。

2 refineries   

精炼厂( refinery的名词复数 )

参考例句：

• The efforts on closedown and suspension of small sugar refineries, small saccharin refineries and small paper mills are also being carried out in steps. 关停小糖厂、小糖精厂、小造纸厂的工作也已逐步展开。
• Hence the sitting of refineries is at a distance from population centres. 所以，炼油厂的厂址总在远离人口集中的地方。

3 tanker   

n.油轮

参考例句：

• The tanker took on 200,000 barrels of crude oil.油轮装载了二十万桶原油。
• Heavy seas had pounded the tanker into three parts.汹涌的巨浪把油轮撞成三载。

4 laden   

adj.装满了的；充满了的；负了重担的；苦恼的

参考例句：

• He is laden with heavy responsibility.他肩负重任。
• Dragging the fully laden boat across the sand dunes was no mean feat.将满载货物的船拖过沙丘是一件了不起的事。

5 ministry   

n.(政府的)部；牧师

参考例句：

• They sent a deputation to the ministry to complain.他们派了一个代表团到部里投诉。
• We probed the Air Ministry statements.我们调查了空军部的记录。

6 embargoes   

贸易禁运令，禁运( embargo的名词复数 )

参考例句：

• Britain, France and the United States refused to lift their embargoes. 英、法和美国都拒绝取消禁运。
• Its public position is that it abides by all UN arms embargoes. 其公开立场是，他们遵守所有联合国的武器禁运命令。

7 minimal   

adj.尽可能少的，最小的

参考例句：

• They referred to this kind of art as minimal art.他们把这种艺术叫微型艺术。
• I stayed with friends, so my expenses were minimal.我住在朋友家，所以我的花费很小。

8 rebounded   

弹回( rebound的过去式和过去分词 )； 反弹； 产生反作用； 未能奏效

参考例句：

• The ball rebounded from the goalpost and Owen headed it in. 球从门柱弹回，欧文头球将球攻进。
• The ball rebounded from his racket into the net. 球从他的球拍上弹回网中。

9 analyst   

n.分析家，化验员；心理分析学家

参考例句：

• What can you contribute to the position of a market analyst?你有什么技能可有助于市场分析员的职务？
• The analyst is required to interpolate values between standards.分析人员需要在这些标准中插入一些值。

10 petroleum   

n.原油，石油

参考例句：

• The Government of Iran advanced the price of petroleum last week.上星期伊朗政府提高了石油价格。
• The purpose of oil refinery is to refine crude petroleum.炼油厂的主要工作是提炼原油。

11 remains   

n.剩余物，残留物；遗体，遗迹

参考例句：

• He ate the remains of food hungrily.他狼吞虎咽地吃剩余的食物。
• The remains of the meal were fed to the dog.残羹剩饭喂狗了。

12 economist   

n.经济学家，经济专家，节俭的人

参考例句：

• He cast a professional economist's eyes on the problem.他以经济学行家的眼光审视这个问题。
• He's an economist who thinks he knows all the answers.他是个经济学家，自以为什么都懂。

13 fulfill   

vt.履行，实现，完成；满足，使满意

参考例句：

• If you make a promise you should fulfill it.如果你许诺了，你就要履行你的诺言。
• This company should be able to fulfill our requirements.这家公司应该能够满足我们的要求。

14 condemn   

vt.谴责，指责；宣判(罪犯)，判刑

参考例句：

• Some praise him,whereas others condemn him.有些人赞扬他，而有些人谴责他。
• We mustn't condemn him on mere suppositions.我们不可全凭臆测来指责他。

15 condemns   

v.（通常因道义上的原因而）谴责( condemn的第三人称单数 )；宣判；宣布…不能使用；迫使…陷于不幸的境地

参考例句：

• Her widowhood condemns her to a lonely old age. 守寡使她不得不过着孤独的晚年生活。 来自《简明英汉词典》
• The public opinion condemns prostitution. 公众舆论遣责卖淫。 来自《现代汉英综合大词典》

16 adviser   

n.劝告者，顾问

参考例句：

• They employed me as an adviser.他们聘请我当顾问。
• Our department has engaged a foreign teacher as phonetic adviser.我们系已经聘请了一位外籍老师作为语音顾问。

17 skittish   

adj.易激动的，轻佻的

参考例句：

• She gets very skittish when her boy-friend is around.她男朋友在场时，她就显得格外轻佻。
• I won't have my son associating with skittish girls.我不准我的儿子与轻佻的女孩交往。

18 cargoes   

n.（船或飞机装载的）货物( cargo的名词复数 )；大量，重负

参考例句：

• This ship embarked cargoes. 这艘船装载货物。 来自《简明英汉词典》
• The crew lashed cargoes of timber down. 全体船员将木材绑牢。 来自《简明英汉词典》

19 sulfur   

n.硫，硫磺（=sulphur）

参考例句：

• Sulfur emissions from steel mills become acid rain.炼钢厂排放出的硫形成了酸雨。
• Burning may produce sulfur oxides.燃烧可能会产生硫氧化物。

20 know-how   

n.知识；技术；诀窍

参考例句：

• He hasn't got the know-how to run a farm.他没有经营农场的专业知识。
• I don't have much know-how about engines.发动机方面的技术知识我知之甚少。

21 tankers   

运送大量液体或气体的轮船[卡车]( tanker的名词复数 )； 油轮； 罐车； 油槽车

参考例句：

• They should stop offloading waste from oil tankers into the sea. 他们应当停止从油轮上往海里倾倒废弃物。
• The harbour admits large tankers and freighters. 这个港口容得下巨型油船和货轮。

22 shipping   

n.船运（发货，运输，乘船）

参考例句：

• We struck a bargain with an American shipping firm.我们和一家美国船运公司谈成了一笔生意。
• There's a shipping charge of ￡5 added to the price.价格之外另加五英镑运输费。

23 lining   

n.衬里，衬料

参考例句：

• The lining of my coat is torn.我的外套衬里破了。
• Moss makes an attractive lining to wire baskets.用苔藓垫在铁丝篮里很漂亮。

24 touching   

adj.动人的，使人感伤的

参考例句：

• It was a touching sight.这是一幅动人的景象。
• His letter was touching.他的信很感人。

25 checkered   

adj.有方格图案的

参考例句：

• The ground under the trees was checkered with sunlight and shade.林地光影交错。
• He’d had a checkered past in the government.他过去在政界浮沉。

26 annexation   

n.吞并，合并

参考例句：

• He mentioned the Japanese annexation of Korea in 1910 .他提及1910年日本对朝鲜的吞并。
• I regard the question of annexation as belonging exclusively to the United States and Texas.我认为合并的问题，完全属于德克萨斯和美国之间的事。

27 divestiture   

n.剥夺

参考例句：

• The court found divestiture to be necessary in preventing a monopoly.法庭发现在防止垄断方面进行资产剥离是必要的。
• Rapid progress was made in the divestiture of radio paging assets from the P & T sectors and the restructuring on a nationwide basis.全国邮电无线寻呼资产剥离、改制重组工作取得了较大进展。

28 aluminum   

n.(aluminium)铝

参考例句：

• The aluminum sheets cannot be too much thicker than 0.04 inches.铝板厚度不能超过0.04英寸。
• During the launch phase,it would ride in a protective aluminum shell.在发射阶段，它盛在一只保护的铝壳里。

29 persistent   

adj.坚持不懈的，执意的；持续的

参考例句：

• Albert had a persistent headache that lasted for three days.艾伯特连续头痛了三天。
• She felt embarrassed by his persistent attentions.他不时地向她大献殷勤，使她很难为情。

30 ethical   

adj.伦理的，道德的，合乎道德的

参考例句：

• It is necessary to get the youth to have a high ethical concept.必须使青年具有高度的道德观念。
• It was a debate which aroused fervent ethical arguments.那是一场引发强烈的伦理道德争论的辩论。

31 Founder   

n.创始者，缔造者

参考例句：

• He was extolled as the founder of their Florentine school.他被称颂为佛罗伦萨画派的鼻祖。
• According to the old tradition,Romulus was the founder of Rome.按照古老的传说，罗穆卢斯是古罗马的建国者。

32 indicted   

控告，起诉( indict的过去式和过去分词 )

参考例句：

• The senator was indicted for murder. 那位参议员被控犯谋杀罪。
• He was indicted by a grand jury on two counts of murder. 他被大陪审团以两项谋杀罪名起诉。

33 evasion   

n.逃避，偷漏(税)

参考例句：

• The movie star is in prison for tax evasion.那位影星因为逃税而坐牢。
• The act was passed as a safeguard against tax evasion.这项法案旨在防止逃税行为。

34 scrutiny   

n.详细检查，仔细观察

参考例句：

• His work looks all right,but it will not bear scrutiny.他的工作似乎很好，但是经不起仔细检查。
• Few wives in their forties can weather such a scrutiny.很少年过四十的妻子经得起这么仔细的观察。

35 bribes   

n.贿赂( bribe的名词复数 )；向（某人）行贿，贿赂v.贿赂( bribe的第三人称单数 )；向（某人）行贿，贿赂

参考例句：

• It was alleged that he had taken bribes while in office. 他被指称在任时收受贿赂。
• corrupt officials accepting bribes 接受贿赂的贪官污吏

36 bribery   

n.贿络行为，行贿，受贿

参考例句：

• FBI found out that the senator committed bribery.美国联邦调查局查明这个参议员有受贿行为。
• He was charged with bribery.他被指控受贿。

37 corruption   

n.腐败，堕落，贪污

参考例句：

• The people asked the government to hit out against corruption and theft.人民要求政府严惩贪污盗窃。
• The old man reviled against corruption.那老人痛斥了贪污舞弊。

38 investigations   

（正式的）调查( investigation的名词复数 )； 侦查； 科学研究； 学术研究

参考例句：

• His investigations were intensive and thorough but revealed nothing. 他进行了深入彻底的调查，但没有发现什么。
• He often sent them out to make investigations. 他常常派他们出去作调查。

39 compliance   

n.顺从；服从；附和；屈从

参考例句：

• I was surprised by his compliance with these terms.我对他竟然依从了这些条件而感到吃惊。
• She gave up the idea in compliance with his desire.她顺从他的愿望而放弃自己的主意。

40 diesel   

n.柴油发动机，内燃机

参考例句：

• We experimented with diesel engines to drive the pumps.我们试着用柴油机来带动水泵。
• My tractor operates on diesel oil.我的那台拖拉机用柴油开动。