The world’s largest independent commodity trading firms are willing to resume trading Russian energy if sanctions are eased. However, top executives warn that any such relief would be gradual and could take years to materialize.
U.S. officials are considering easing sanctions as part of ongoing negotiations to end the war in Ukraine, initiated under the Trump administration. Yet, amid ongoing uncertainty about ceasefire talks, it remains unclear when, or if, significant sanctions relief will come for Russian energy exports.
Despite the uncertain timeline, Western trading giants are preparing to return to Russian oil trade should sanctions be lifted. This was confirmed by the CEOs of several major trading firms at the FT Commodities Global Summit in Lausanne, Switzerland, this week.
Traders Stand Ready, But Cautious
Before Russia’s invasion of Ukraine in 2022, companies like Vitol, Trafigura, Gunvor, and Mercuria were leading players in Russian oil exports. However, following the imposition of sanctions by the U.S., EU, UK, and G7, these firms ceased handling Russian oil. The G7 also introduced a price cap mechanism, allowing Russian oil exports to third countries as long as they were sold at or below $60 per barrel, and Western insurance and financing were used. This cap was implemented at the end of 2022, coinciding with the EU’s embargo on Russian crude.
While cautious, top executives from the leading trading houses indicate they would return to the Russian energy market if sanctions are lifted. Gunvor’s CEO, Torbjörn Törnqvist, told Bloomberg, “If sanctions are eased in a way that we can go back in, why wouldn’t we? It’s our job.” He added that although some gray areas exist, the firm refrains from trading Russian oil until any ambiguities are cleared.
Mercuria’s CEO, Marco Dunand, echoed similar sentiments at the summit, stating, “If sanctions were lifted, we would absolutely consider if we could bring value and go back.”
Sanctions Relief Will Be Gradual
Trafigura CEO Richard Holtum pointed out that a piecemeal approach to sanctions relief—where the U.S. lifts sanctions first and the UK and EU follow later—would complicate the process. He emphasized that any significant return of Russian oil to global markets would take months and would not immediately disrupt market balance.
Holtum explained, “You would need to see a wholesale winding back of all sanctions before it’s something that could even be considered.”
Vitol’s CEO, Russell Hardy, predicted that it could take “a year or two” before Europe begins to ease sanctions on Russian oil.
Russia’s Shift to Asian Markets
Even if sanctions on Russian oil are eventually relaxed, the landscape will likely look different from before the war. Russia has already developed new networks of traders, intermediaries, and tankers to supply oil to major Asian markets, particularly China and India. Gunvor’s Törnqvist suggested that even with eased sanctions, Russia may not revert to long-term contracts with Western trading houses.
Following the most stringent U.S. sanctions on Russian oil exports in January, it took just two months for the Russian-Indian oil trade to adapt. India’s crude imports from Russia have been rebounding, with traders using non-sanctioned tankers to bypass restrictions. The price of Russia’s Urals grade oil has also dropped below the G7 price cap, allowing Western firms to facilitate shipments.
Meanwhile, China has found workarounds to continue importing Russian oil, with independent Chinese refiners stepping in to fill the gap left by state oil firms, which have reduced their purchases for now.
As Russia’s energy trade continues to evolve, it remains to be seen how long it will take for Western traders to reenter the market. The easing of sanctions, when it comes, will likely be a slow process, and the global oil market may face a new landscape of competition and shifting trade routes.
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