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Since the U.S. imposed sanctions in March, American refineries have stopped welcoming tanker ships laden with Russian oil. But Russian crude exports to other parts of the world have been increasing.

The American sanctions aim to cut the hard-currency revenues that feed the Russian economy and its war effort: 36% of Russian federal budget revenues came from oil and gas last year, according to Russia's Finance Ministry. But while the U.S., Canada, the U.K. and Australia have formal embargoes, most countries around the world don't, and oil refineries from India to Spain are still purchasing Russian crude.

A drop-off in Russian oil exports was minimal and has strongly rebounded in April, despite fears of supply shortages driving recent high oil prices, says Matt Smith, lead oil analyst at Kpler, a data analytics firm. Russia has earned more than $12 billion from oil exports since its invasion of Ukraine, according to the Centre for Research on Energy and Clean Air, an international research group. A month into the U.S.-led sanctions, the flow of Russian petroleum to the world, as well as the revenues from it, remains strong.

Much of this oil trade is facilitated by a highly efficient and sometimes controversial group of middlemen: oil trading firms. Oil traders act as global matchmakers between the countries and companies that pump oil and the refineries that process crude into gasoline and other fuels.

"We're merchants," says Saad Rahim, chief economist of Trafigura, a commodity trading firm that handles about 7 million barrels of oil and products a day. "In a sense, it's the oldest business in the world."

Trafigura is one of a handful of companies in Switzerland that handles about a quarter of the world's oil each day. For decades, these firms have sourced much of their oil from Russia. About 80% of Russian commodities are traded in Switzerland, according to a 2021 report from the Swiss Embassy in Moscow. Some oil traders also have stakes in Russia's state oil company and its assets, including in a megaproject in an environmentally fragile part of the Russian Arctic.

In the weeks following Moscow's invasion of Ukraine, many trading firms have said they are reviewing their holdings in Russia. Yet traders continue to facilitate the flow of Russian oil and, last month, even increased their Russian oil trading activity, says Oliver Classen, spokesperson for Public Eye, a commodity trading watchdog group in Switzerland.

"We're just looking at data that suggests that key traders working out of Switzerland have significantly stepped up their activities in the war month of March," Classen says.

Some of the trading firms that handle the most Russian oil say they're legally bound to fulfill preexisting contracts to lift Russian crude and are complying with all sanctions. Trafigura and the commodity trading firm Gunvor tell NPR that they condemn the war in Ukraine. Another trader, Glencore, directed NPR to its website, where it also condemns the war. The firm Vitol announced last week that it would stop trading Russian oil by the end of this year.

But for now, the traders' continued loadings have big implications for Russia's ability to wage war in Ukraine, says Alexandra Gillies, an adviser at the Natural Resource Governance Institute, an organization focused on extractive industries.

"In this situation," Gillies says, "they're offering a financial lifeline to Vladimir Putin and his government."

March was busy for traders loading Russian crude

The International Energy Agency has predicted that starting this month, global markets could lose as much as 3 million barrels a day of Russian oil because of sanctions and skittish buyers. The European Union says it is considering oil sanctions. But with the current limited sanctions led by the U.S. in place, oil traders in London and Geneva tell NPR that while some Russian crude is getting rerouted, so far the majority of cargoes are making their way to market.

Traders manage a complex global web of oil, says Giacomo Luciani, an energy economist and professor at the Paris Institute of Political Studies, or Sciences Po. "They're middlemen, so their job consists in matching the most appropriate crude with the most appropriate refinery," he says. Crude oil varies based on qualities such as weight and sulfur content. "It's like wine. Each crude oil is different."

Across the supply chain, traders are valued for their logistical know-how. "They do not own tankers, but they know where the tankers are, they know how to rent a tanker," Luciani says.

Since the invasion of Ukraine, these trading companies have been putting their know-how to work to help keep oil flowing out of Russia. A recent report from Reuters using shipping data shows that March was Trafigura's busiest month of loading cargoes of Russian oil since June 2021. Vitol maintained about the same level of Russian cargoes in March as it did in January and February, and both these companies are still lining up tankers to lift Russian oil this month and next, according to Reuters.

Rahim, of Trafigura, says because the traders aren't sending Russian oil to the U.S. or other countries that have sanctioned Russian oil, their business is legal. "The barrels are not sanctioned that any of the trading houses are touching today," Rahim says. "We have to ensure that that flow continues."

Commodity traders have a checkered history

For decades, the commodity traders in Switzerland have been deeply intertwined with Russia, Luciani says.

Gunvor was co-founded by Putin ally Gennady Timchenko. He sold his Gunvor shares in 2014, just before the U.S. placed sanctions on him following Russia's invasion of Ukraine and annexation of Crimea. Gunvor has a minority, noncontrolling stake in an oil products terminal on the Baltic Sea. A Gunvor spokesperson said in an email to NPR, "The terminal is being reviewed for divestiture."

Vitol and Trafigura each have minority stakes in state oil producer Rosneft's Vostok Oil project in the Russian Arctic. Both companies have announced that they are reviewing their stakes.

Glencore, which owns a small stake in Rosneft as well as a part of a Russian state aluminum project, says on its website that "there is no realistic way to exit these stakes in the current environment."

Litasco, a Swiss oil trading company owned by Russian state oil company Lukoil, and Petraco, a Swiss trader that also has contracts for Russian production, did not reply to requests for comment.

But the traders' ties to Putin's Russia only add to persistent ethical questions that have long haunted the industry, going back to the so-called godfather of oil trading, Marc Rich. Rich, the founder of Glencore, was a notorious sanctions-buster, trading oil with Ayatollah Ruhollah Khomeini's Iran and apartheid South Africa. He was indicted in the 1980s for tax evasion, wire fraud and other crimes, and he fled to Switzerland.

In recent years, commodity trading companies have faced renewed scrutiny for their oil deals. In 2020, Vitol admitted to paying millions of dollars in bribes for oil contracts in Brazil, Ecuador and Mexico, and it paid over $135 million to resolve a U.S. Justice Department probe. In 2019, Swiss courts found Gunvor criminally liable for bribery in oil deals in the Republic of Congo and Ivory Coast. Glencore is currently involved in corruption probes in the U.S., the U.K. and Brazil, and it has set aside $1.5 billion for settlements this year for what its chief executive has described as historic misconduct. Brazilian authorities have named Trafigura in investigations into oil deals, but the company denies the allegations.

Rahim says new transparency measures around payments to foreign governments and a move away from agents have changed the culture of the trading industry: "People probably who were in this industry even in the early 2000s would probably not recognize kind of how it is today."

As for the current limited sanctions on Russian oil, Rahim says trading firms are constantly monitoring new regulations to figure out what is allowable. "Across the physical trading houses, I'll tell you that probably the busiest people at those companies are the people in compliance right now," he says.

"A duty of care"

For oil traders, Russia is a key, and not easily replaceable, source in global energy markets. At the recent FT Commodities Global Summit in Lausanne, Switzerland, CEOs of Vitol and Gunvor said that Russia supplies about half of Europe's diesel. Europe now faces diesel shortages, and Rahim says if trading firms were to suddenly stop handling Russian barrels, there would be many more energy shortages all around the world. "We have sort of a, almost a duty of care to make sure that the system maintains itself," he says.

In late March, the economic adviser to Ukrainian President Volodymyr Zelenskyy wrote a letter to the heads of Vitol, Trafigura, Glencore and Gunvor. According to the Financial Times, which first reported the letter, Oleg Ustenko asked the companies to stop trading Russian energy products, which are financing Putin's invasion.

For the trading companies, it is getting harder to find ships willing to pick up cargoes of Russian crude and find banks to provide letters of credit. But while Vitol has announced its plans to stop trading Russian oil by the end of the year, for now it and other key traders are continuing to operate in Russian ports. A Trafigura spokesperson told NPR that the company expects to load lower volumes after May 15. Trading arms of international oil companies like Shell and TotalEnergies also still have long-term contracts to lift Russian oil.

Gillies, of the Natural Resource Governance Institute, says leaving the oil traders to make their own decisions about pulling out of Russia is a mistake. "Commodity traders for years have shown a willingness to do business with almost everybody," Gillies says. "And so it's not an ideal situation to have these commodity trading companies making those policy decisions about whether they should be continuing to buy Russian oil or not."

"These are some of the most economically important transactions to the Russian state right now," she adds, "so any steps to make those transactions more difficult, I think, is really important."