About 80% of Russian commodities are traded in Switzerland, according to a 2021 report from the Swiss Embassy in Moscow. For decades, these firms have sourced much of their oil from Russia. Trafigura is one of a handful of companies in Switzerland that handles about a quarter of the world's oil each day. "In a sense, it's the oldest business in the world." "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. 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. Much of this oil trade is facilitated by a highly efficient and sometimes controversial group of middlemen: oil trading firms. 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. 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. and Australia have formal embargoes, most countries around the world don't, and oil refineries from India to Spain are still purchasing Russian crude.Ī 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. 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 Russian crude exports to other parts of the world have been increasing. imposed sanctions in March, American refineries have stopped welcoming tanker ships laden with Russian oil. ![]() However, most countries have not, and refineries around the world still import Russian oil.įrank Molter/dpa/picture alliance via Getty Images Trafigura's credit lines rose by $7 billion in the period to a record $73 billion to cushion its trading needs and net finance expenses rose by 72% to $689 million.Activists demonstrate in front of a ship carrying Russian oil in the Baltic Sea this spring. Top trading firms said in March that the gas market in particular had become dysfunctional as liquidity evaporated when many market participants were forced to cut back trading. In an accompanying press release, Trafigura said "lack of depth available in commodities futures looks set to continue to be a challenge." "Extreme volatility.brought elevated margin calls and tighter position limits that made hedging activity more expensive and in some cases constrained access to commodities futures markets," Weir said in the half-year report. Prices and volatility across most key commodities spiked in tandem after Russia's invasion, creating an urgent need for extra banking lines to cover hedges and the suddenly much higher cost of every physical cargo. Traded oil volumes rose 14% to 7.3 million barrels per day (bpd) while non-ferrous metals rose by 16% and bulk minerals by 13%. CEO Jeremy Weir said earlier this week that the Russian business accounted for 6% of its total. Trafigura has stopped moving crude oil produced by Russia's state-owned Rosneft since May although it still moves a small volume of products to Europe, in accordance with EU sanctions. Net profit was $2.7 billion, up 27% on the same period in 2021 while EBITDA was $4.7 billion, up from $3.7 the previous year. The trader posted a record first-half net profit and core earnings on the back of extreme volatility across commodity markets.
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