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13 Mar, 2023 06:40

US privately urged traders to resume shipments of Russian oil – FT

Trading companies say Washington “actively encouraged” them to re-engage in shipping crude, the outlet reported
US privately urged traders to resume shipments of Russian oil – FT

The US government has quietly told the world’s largest commodity traders to shed concerns over deals with price-capped Russian oil in an effort to ensure global supplies, the Financial Times has reported citing sources familiar with the matter.

Last year, G7 countries and the EU banned imports of seaborne Russian oil, but sales to countries that haven’t joined the sanctions are still permitted at a price limit of $60 per barrel.

While the White House hasn’t opposed trading Russian crude in compliance with the price cap, major trading houses have shunned oil deals from the sanctions-hit country, the outlet said.

But as concerns over curbs in Russian oil supplies are mounting, Washington – which had been pushing for restrictions – is now seeking to secure the flows. According to the FT, US Treasury Department officials have held private meetings with the executives and traders of some of the largest global trading companies – including Trafigura and Gunvor – urging them to resume shipping Russian oil.

“We’ve been actively encouraged by the Americans  . . .  to re-engage on moving the oil,” one trader who spoke with Treasury officials told the news outlet.

Washington reassured these companies that they could trade with Russia without breaching Western penalties, FT reported, citing five people involved in the talks.

“It’s up to individual companies to make their own decisions. Our goal is to communicate what is allowed under the price cap architecture,” an official from the Biden administration said, according to the outlet.

While traders from the EU and G7 countries require documentation proving that Russian oil is traded in line with the price cap, US enforcement was “relatively lax,” the outlet noted, citing traders.

“The Americans really do want [Russian oil] to move,” one of the traders told the FT.

Last year, Trafigura, Vitol, Gunvor and other major traders stopped doing business with Russia over concerns about their reputation and the fear of losing banking support. Trifugura sold its 24.5% stake in oil-refining company Nayara, in which Rosneft owns 49.13%.

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