- The world’s biggest oil traders will reduce their purchases of Russian crude from May 15, Reuters reported on Thursday.
- According to sources, the intention is to avoid breaking possible EU sanctions against Russia, according to the report.
- The EU has yet to impose a ban on Russian oil imports given the region’s heavy dependence on them.
The world’s largest oil trading houses are expected to reduce the amount of oil purchased from Russia from May 15, according to a Reuters report on Thursday, which cited unnamed sources.
Shell has already stopped buying Russian crude oil and Vitol, the world’s biggest oil trader, said on Wednesday it would phase out crude oil from the country completely by the end of 2022, followed by Trafigura.
The source says major oil trading houses will reduce their purchases to avoid violating European Union sanctions on Russia, although the bloc has yet to officially ban oil imports from the country, according to the report.
Currently, the EU allows purchases of crude oil from Gazpromneft or Rosneft on the grounds that they are necessary to maintain an adequate energy supply. However, trading houses are confused about the ambiguity of the word “necessary” as they act as an intermediary for these purchases, which influenced their decision to drastically reduce the amount they purchase.
In addition, EU countries have discussed a possible oil embargo against Russia, while the United States has banned all energy imports from the country and the United Kingdom has pledged to completely reduce energy imports from Russia by the end of 2022.
Last week, the EU took its first steps in banning Russian energy imports in response to Putin’s war on Ukraine, with the bloc agreeing to stop coal imports altogether, from the end of the year.
This was followed by the European Parliament voting for an outright ban on the import of fossil fuels from Russia as the invasion of Ukraine continued. Although the parliament has far less influence and power than the European Commission, this can be an indicator of the mood in Europe and a sign of things to come.
Many European countries rely heavily on Russia for oil imports. Germany, the region’s largest economy, could lose $240 billion, or 6.5% of its annual economic output, over two years if Russian gas is shut down, according to a report released Thursday by a research group. economic institutions that advise the government.
The EU receives around 3.1 million barrels of oil per day from Russia, which covers around 30% of its needs. Russia supplies more oil to the bloc than the next three major suppliers – Iraq, Nigeria and Saudi Arabia – combined. Germany and the Netherlands are the main destinations.
Brent crude futures fell 0.97% to trade at $107.72 a barrel on Thursday, while West Texas Intermediate fell 1.14% to trade at around $103.03 per barrel, after a surprise increase in weekly inventories in the United States.
Insider reached out to Vitol, Glencore and Gunvor for comment on the story but did not immediately receive a response.
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