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New Oil Traders Fill Void

New Oil Traders Fill Void

The market is attempting to figure out who will fill the hole left by the world’s major oil merchants cutting back on Russian crude supplies.

A medium-sized Geneva-based dealer with close ties to Moscow, numerous smaller organizations that are becoming more active, and some whole new names, like Bellatrix, the name of a wicked wizard from the Harry Potter universe, are among the responses.

For both the global oil market and Moscow, Russia’s ability to find middlemen, ships, and purchasers for its crude is critical. The fewer barrels a country sells, the greater the strain on supply, as well as revenue.

The diverse group of dealers demonstrates how, for the time being, Russia is conquering Trafigura Group and Glencore Plc, two of the world’s largest commodity traders. Vitol Group, the world’s largest oil trader, has also stated that it will not take on any new Russian business and that its activities will be reduced beginning this quarter.

According to port-agent statistics collated by Bloomberg, Litasco SA, a unit of Moscow-based producer Lukoil PJSC, has become the largest handler of Russia’s flagship Urals grade. It contracted tankers to transport at least 14 million barrels in April and 8.6 million so far this month, considerably outnumbering anybody else.

Although the US and the UK have declared phased-in prohibitions, and Europe is poised to do similarly in the coming weeks, there are no legal barriers to transporting Russian oil.

Litasco, based in Geneva, declined to comment on trade, but said it and its subsidiaries and affiliates abide by all rules and regulations. “All required precautions to reduce the impact of the international crisis on existing operations, customers, and consumers,” the merchant stated.

The majority of Litasco’s cargoes were most likely from Lukoil. Previously, at least some European refiners would have leased tankers to transport their products.

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Since the war, a huge number of purchasers have indicated that they will no longer do business with Russia, which means Litasco will have to sell and ship an increasing number of barrels.

Litasco has also begun delivering additional petroleum from the Arctic Sea to southern Italy, where the business operates an oil refinery. Previously, crude from the Arctic Sea would have been shipped to northern Europe and North America.

Important Shifts

There are also significant developments in Asia, where Russia sells more than 350 million barrels of crude per year, the majority of which is sold to Asian clients. That amounts to nearly a quarter of the country’s oil exports.

According to shipbrokers and fixtures reviewed by Bloomberg, Shandong Port Group Co., a company with close ties to oil refiners in the Chinese province of the same name, contracted the tanker Kriti Future to transport Russian ESPO oil from Kozmino port to China this month.

Calls to Shandong Port Group’s general office were not returned, and an email was not promptly responded to.

The corporation has many ports, warehouses, and its own fleet of ships, all of which are sponsored by the local government. A tanker carrying 100,000 tons of petroleum is due to arrive at Dongjiakou, near Qingdao, in the middle of May, according to a WeChat announcement made on its official account.

According to market participants, Shandong Port Group’s activities and connections with local enterprises indicate that some ESPO crude receivers are becoming more directly involved in bringing in more Russian barrels, most likely because the large cargo brokers have pulled back.

According to the merchants, at least two Chinese oil businesses and an international trading house stopped loading cargoes from the Kozmino to be delivered to China earlier this month.

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“Mainstream traders, including state-owned firms, have issued very public drop-dead dates to stop trading Russian oil this month, well after many shipping firms have abandoned the market,” said Anoop Singh, head of tanker research at Braemar ACM Shipbroking Pte.

“If the EU imposes a blanket ban, Russian oil commerce would have to become more private, while some of those inexpensive barrels will continue to flow into Asia’s constrained markets,” he added.

Bellatrix, Livna 

The most unusual name to lift Russia’s flagship Urals grade is a firm called Bellatrix. This month, it has ships transporting almost 3 million barrels of the crude, according to port-agent information compiled by Bloomberg. Two shipbrokers and three traders said they had never previously heard of Bellatrix and were unable to obtain contact information for it. 

Bellatrix’s May shipments represent a quarter of all the Urals crude from the Baltic Sea port of Primorsk where the name of the name of company shipping the barrels is listed. Bellatrix Lestrange is a character in Harry Potter books and movies. It has never previously appeared in the port-agent reports compiled by Bloomberg.

Oil traders and shipbrokers across Asia said more vessels loaded with Russian crude cargoes have also been hired by smaller charterers. The anticipation of an EU ban, coupled with the exit of larger firms, is putting increasing pressure on Asian customers to stop openly taking these barrels, according to traders.

In Asia, a firm called Livna Shipping Ltd. is becoming more involved in a key trade. The Hong Kong-registered shipping company has been listed as the charterer of eight vessels to move Russia’s ESPO crude to China so far in May, data from shipping analytics firm Vortexa Ltd show. The company was a relatively small participant in April and had just two charters, and none in March. 

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Vessels Agistri and Kriti Verano loaded ESPO crude from Kozmino by Livna in early May and went to Qingdao and Yingkou in China, according to Bloomberg ship-tracking data. Five additional ships have been chartered by Livna to deliver the variety to Chinese buyers later this month, while Agistri has been hired twice for the trade. The journey usually takes less than a week after loading.

A person who answered the phone at Livna in Hong Kong declined to comment.

Other emerging names include Coral Energy, which lists a Dubai address and phone number on its website, which makes numerous references to Russian operations.

Top Traders

Who is not delivering Russian oil is at least as interesting as who is. Since April, Glencore has not been listed as the transportation business for any Urals crude. In March, the business announced that it would respect current contracts in Russia but would not sign any new ones.

Similarly, Trafigura’s exports appear to have plummeted this month.

The business has lined up tankers to transport 200,000 tons of Urals so far in May. This is down from over a million tons in both March and April. Trafigura was unavailable for comment.

This month, Vitol remained a significant Urals shipper, although it has also committed to cutting. According to port records, it had ships for more than 14 million barrels of petroleum in April and May, second only to Litasco.

“Oil volumes will fall significantly in the second quarter as current term contractual commitments decline, and we anticipate completion by the end of 2022,” Vitol stated in an April statement.

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