Major global trading houses are planning to reduce crude and fuel purchases from Russia's state-controlled oil companies as early as May 15, sources said, to avoid falling foul of European Union sanctions on Russia.
Trading companies are winding down purchases from Russian energy group Rosneft as they seek to comply with language in existing EU sanctions that were intended to limit Russia's access to the international financial system, the sources said.
The wording of EU sanctions exempts oil purchases from Rosneft or Gazpromneft, which are listed in the legislation, deemed as "strictly necessary" to ensure Europe's energy security.
Traders are wrestling with what "strictly necessary" means, the sources said. It may cover an oil refinery receiving Russian oil through a captive pipeline, but it may not cover the buying and selling of Russian oil by intermediaries. They are cutting purchases to ensure they comply by May 15, when EU restrictions take effect, Reuters reported.
The inclusion of Russia's state infrastructure firm Transneft that owns the key ports and pipelines will add a further layer of complexity for any future sales.
Trafigura, a major Russian oil buyer, told Reuters it "will comply in full with all applicable sanctions. We anticipate our traded volumes will be further reduced from 15 May."
Vitol, another big buyer, declined to comment on the May 15 deadline. Vitol has previously said traded volumes of Russian oil "will diminish significantly in the second quarter as current term contractual obligations decline,” and it will cease trading Russian oil by the end of 2022.
Refiners in Europe are becoming increasingly reluctant to process Russian crude. That has already disrupted Russian exports, although purchases by India and Turkey have made up for some of the slack. Sales to China also continue unabated.
Rosneft and Gazpromneft volumes accounted for 29 million barrels, or nearly 1 million barrels per day (bpd) in April, which is over 40% of overall Urals crude oil exports from Russia's western ports in April, according to the loading plan.
