The Financial Times has reported that the US government is quietly encouraging the largest commodity traders in the world to deal in price-capped Russian oil, as they seek to boost global supplies of crude on the market to keep prices lower, according to sources familiar with the matter.
Although G7 countries and the EU banned import of Russian seaborne crude last year, it is still allowed to be sold to countries which have not joined the sanctions, so long as it is sold below the price cap of $60 per barrel.
Although Washington had not explicitly opposed the trade of Russian crude so long as it complied with the price cap, major trading houses had steered clear of such deals with the sanctioned country for fear of political repercussions.
However in Washington, concerns have grown over global oil supplies, as well as the effect curbs in Russian flows might have on pricing. This has led the government in Washington, which had been pushing for restrictions on Russian sales, to now seek to help enable the flows.
The Financial Times has reported that US Treasury Department officials have been holding meetings with the leaders of some of the largest trading companies in the world, including Trafigura and Gunvor, to encourage them to resume shipping Russian oil.
One trader involved in the meetings said, “We’ve been actively encouraged by the Americans . . . to re-engage on moving the oil.”
Citing five sources involved in the talks, FT reported Washington is reassuring traders they are free to deal in the Russian oil without breaching any Western sanctions.
According to the outlet, an official from the Biden administration said, “It’s up to individual companies to make their own decisions. Our goal is to communicate what is allowed under the price cap architecture.”
Although traders in EU and G7 countries are required to secure documentation proving that Russian oil has been sold in accordance with the price cap, the outlet noted that traders said that enforcement was, ‘relatively lax.”
One of the traders told FT, “The Americans really do want [Russian oil] to move.”
Trafigura, Vitol, Gunvor and other major traders ceased all business with Russia last year over reputational concerns, as well as fears of being cut off from Western banking support. Trifugura even went so far as to sell its 24.5% stake in Nayara, an oil-refining company which is 49.13% owned by Russian energy giant Rosneft.
