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U.S. investigates major oil trader for Russia sanctions violations

by Patria

The US Justice Department is looking into whether Murtaza Lakhani, the founder and chief executive of oil trader Mercantile and Maritime Group, traded Russian oil in violation of the G-7’s cap on prices and the West’s sanctions against Russia, the Journal reported on Monday, citing sources familiar.

Under the sanctions imposed by the United States, the European Union, Australia, Britain and other Western allies, Russian crude oil must fetch $60 a barrel or below if shipments to third countries are to use Western insurance and finance.

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Mercantile & Maritime, a Singapore-based independent commodities trading company, provides oil and gas trading services including paper trading and hedging, physical trading, shipping, financial services, and storage terminals and bunkering.

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According to the Journal’s sources, Mercantile & Maritime’s founder, Lakhani, is being investigated by the U.S. Department of Justice over whether he has a business relationship with Igor Sechin, the CEO of Russian state-owned oil giant Rosneft, who is a sanctioned person in the U.S.

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In July, a spokesman for Lakhani told the WSJ that the businessman and any company in which he had an interest were no longer involved in Russian oil trading.

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The sanctions and the G7 price cap were designed to reduce Putin’s oil revenues while still keeping crude and products from Russia on the international market. Russia’s top crude customers are now China and India, where most of Moscow’s oil will go after the Western embargo takes effect at the end of 2022.

Recently, rising oil prices and narrowing discounts on its crude grades relative to international benchmarks have helped boost Russia’s revenues.

Finance Ministry data earlier this month showed that Russia’s oil and gas revenues rose 15% in September from August to $7.4 billion (739.9 billion Russian rubles). The rise in oil prices in September led to higher budget revenues from the so-called mineral extraction tax. The average price of Russia’s main crude, Urals, averaged $83.08 a barrel in September, higher than the average of $68.25 a barrel in September 2022, the Finance Ministry said earlier this month.

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