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Russia's Oil Export Loophole Runs Through Greece

Tyler Durden's Photo
by Tyler Durden
Thursday, May 26, 2022 - 09:00 AM

By Alex Kimani of OilPrice.com

Last month, we reported that India had doubled down on Russian oil after the west slapped a chain of sanctions on Moscow. India has never been a big buyer of Russian crude despite needing to import 80% of its needs. In a typical year, India imports just 2-5% of its crude from Russia, roughly the same proportion as the United States did before it announced a 100% ban on Russian energy commodities.  Indeed, India imported only 12 million barrels of Russian crude in 2021, with the majority of its oil coming from Iraq, Saudi Arabia, the United Arab Emirates, and Nigeria.

But reports emerged of a "significant uptick" in Russian oil deliveries bound for India. Matt Smith, the lead oil analyst at Kpler, told CNBC that since the beginning of March, five cargoes of Russian oil, or about 6 million barrels, have been loaded and are bound for India. In other words, India imported half as much crude from Russia in one month as it did in an entire year.

China, on the other hand, had seen crude imports from Russia in the first two months of the year actually declined 9.1% to 1.57 mb/d largely due to a government crackdown on private Chinese refiners known as teapots. But with years of experience shipping banned Iranian oil using various cloaking methods, China is expected to remain one of Russia's biggest oil customers.

Well, it appears that Russia won't be lacking new buyers of its deeply discounted Urals any time soon.

Refinitiv Eikon via Reuters has just reported that Greece has emerged as a new hub for Russian oil via ship-to-ship (STS) loadings. According to the report, April shipments of Russian fuel oil with Greece as a destination clocked in at nearly a million tonnes, about double March levels, and are expected to reach new highs in May.

Russia has been increasing fuel exports to Greece, with shipments set to jump to about 2.5 million barrels, according to data from oil analytics firm Vortexa.

Trading Russian crude and oil products remain legal for now because EU members cannot seem to agree on the methodology of a complete ban.

Weathering tough sanctions

For all the tough talk about abandoning Russian energy commodities, Russia is still managing to sell a good amount of its oil and gas, thanks to the fact that some of the world's biggest commodity traders have little compunction against financing Putin's war machine.

According to ship tracking and port data, Switzerland's Vitol, Glencore, and Gunvor as well as Singapore's Trafigura, have all continued to lift large volumes of Russian crude and products, including diesel.

Vitol has pledged to stop buying Russian crude by the end of this year, but that's still a long way from today. Trafigura said it would stop buying crude from Russia's state-run Rosneft by May 15th, but is free to buy cargoes of Russian crude from other suppliers. Glencore has said it wouldn't enter any "new" trading business with Russia. But the reality is that while the G7 has committed to banning or phasing out Russian oil imports, and while the U.S., Canada, the UK, and Australia have imposed outright bans, the EU is still unable to move forward, with Hungary holding a ban hostage. Meanwhile, India and China are making up for much of the losses for Russia.

A lot of the blame falls on Switzerland. The lion's share of Russian raw materials is traded via Switzerland and its nearly 1,000 commodity firms.

Switzerland is an important global financial hub with a thriving commodities sector, despite the fact that it is far from all the global trade routes and has no access to the sea, no former colonial territories, and no significant raw materials of its own. 

Oliver Classen, media officer at the Swiss NGO Public Eye, says that "this sector accounts for a much larger part of the GDP in Switzerland than tourism or the machinery industry". According to a 2018 Swiss government report, commodity trading volume is nearly $1 trillion ($903.8 billion). 

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