Unknown Traders Make Major Moves With Russian Oil | OilPrice.com

Historically, commodity trading giants like Switzerland Vitol, Glencore, and Gunvor as well as in Singapore Transfiguration dominates global oil trading while smaller trading desks that lack the reach and deep infrastructure networks of the giants usually eat the crumbs. The same case applied to the Russian market before Putin’s invasion of Ukraine, where Trafigura was moving ~850,000 barrels of Russian crude per day at its peak. But oil’s hegemony has now been disrupted, with Bloomberg reporting that six unknown companies based in Dubai and Hong Kong now dominate the Russian oil trade with the traditional leaders out of the picture.

According to Bloomberg, Russian customs data shows that Nord Axis Ltd, Tejarinaft FZCO,QR Trading DMCC, Concept Oil Services Ltd, Bellatrix Energy Ltd and Coral Energy DMCC together hold about 1.4 million barrels a day of Russian crude oil. That’s more oil than the commodity giants typically handled before the war in Ukraine, and enough to meet the entire demand of countries like the UK and Italy.

Interestingly, it is Nord Axis, a company incorporated last year in Hong Kong, that has emerged as the largest buyer, moving 521,000 barrels of Russian crude per day. Nord Axis was virtually unknown in the oil market until it bought Trafigura’s stake RosneftVostok Oil’s major oil project in July. Dubai-based Tejarinaft FZCO is the second largest buyer after it bought 244,000 barrels per day from Rosneft while Dubai-based QR Trading DMCC is the third largest buyer, moving 199,000 barrels per day from Surgutneftegas PJSC. Other top buyers are Hong Kong’s Concept Oil Services Ltd (152,000 b/d), Hong Kong-based Bellatrix Energy Ltd (151,000 b/d) and Dubai’s Coral Energy DMCC (121,000 b/d).

Source: Bloomberg

It is not clear how these traders financed the huge flows of Russian oil, which Bloomberg estimated was worth more than $2 billion in December.

Further confusing is the fact that Nord Axis, QR Trading DMCC and Bellatrix Energy Ltd were unknown entities before the west neglected Russian energy markets. Bloomberg confirmed that Bellatrix received loan facilities from Russian banks including those owned by Rosneft Russian Regional Development Bank and Russian Agricultural Bank, even calls or emails to these traders, their banks and oil producers in Russia went unanswered.

Knowing who the big names are is an important step in understanding how oil markets respond to the price cap and broader sanctions,Steve Cicala, co-director of the Project on the Economic Analysis of Regulation at the National Bureau of Economic Research, told Bloomberg.

Meanwhile, other experts refuted the opacity of Russian oil markets, “We come here with a lot of humility and we only wish that others can adopt the same level of uncertainty. These are really murky markets, the data is not good here. Let’s just accept that from the beginning when we draw conclusions,” US Assistant Treasury Secretary Ben Harris told Bloomberg.

Russian Oil Is Rising, But Not Forever

Last year, against all odds, Russia increased its oil output despite severe sanctions, dozens of oilfield service companies exiting the country as well as the refusal of western countries to buy much of its crude.

In fact, Energy Intelligence reports that in 2022, Russia’s crude oil and condensate production will increase by 2%, with oil production reaching 10.73 million b/d, more than the 10.33 million b/d forecast by the Russian ministry for economic development.

Russia was able to achieve this feat mainly by offering large discounts to buyers such as China and India, with Bloomberg oil strategist Julian Lee reporting that the two were receiving discounts of $33.28 per barrel, or about 40% to the international price of Brent crude oil at the time.

But Moscow cannot continue to defy the odds indefinitely. BP Plc (NYSE: BP) has predicted that the country’s output is likely to take a big hit in the long term, with production falling by 25%-42% in 2035. BP said that Russia’s oil output could drop from 12 million barrels per day in 2019 to 7-9 million bpd in 2035 as a limited rate of access to foreign projects, as a high level of access to foreign projects, due to a high rate of -access to foreign projects. reduction in current operating assets.

In contrast, BP says OPEC will become more dominant as the years go by, with the cartel’s share of global production rising to 45%-65% by 2050 from just over 30% currently. Bad news for bulls: BP remains bearish on long-term prospects for oil, saying demand for oil will likely increase over the next 10 years and then decline to 70-80 million bpd in 2050.

That said, Russia may still avoid a sharp decline in production as many of the assets of the oil companies that exited the country have been abandoned or sold to local management teams that retain critical expertise.

By Alex Kimani for Oilprice.com

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