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Trading house bosses predict a long road back for Russian energy

Trading house bosses predict a long road back for Russian energy

The lifting of sanctions against Russian energy will likely be gradual and patchy. This means that the return of Russian oil and gas beyond Asia in the near term is unlikely to be significant.

The heads of Vitol Mercuria Trafigura Gunvor, who used to dominate the Russian oil trade prior to the 2022 invasion in Ukraine, said at the FT Commodities Global Summit held in Switzerland that they would be very cautious when trading Russian volumes.

None of them, however, excluded the possibility of supplying Russian energy. This demonstrates a radical change in approach that is being considered by industry following President Donald Trump's reversal of U.S. policy towards Russia and Ukraine.

Vitol CEO Russell Hardy stated that the European Union's sanctions would be eased in a year to two.

He added, "You will probably see some changes in the pipeline flow. Some countries may decide to import oil while others do not."

Trafigura CEO Richard Holtum stated that the U.S. may be the first country to lift the sanctions while EU and UK would remain in place longer.

Before it could be considered, you would have to see the complete reversal of all sanctions.

As part of Trump’s efforts to end the conflict in Ukraine, the White House has begun to develop plans for Russia sanctions relief. European officials have recently stated that they would still avoid Russian oil if sanctions are eased.

Gunvor CEO Torbjorn Tornqvist stated that Russia may not want to return to its pre-war status-quo, where it signed long-term contracts to manage shipping and marketing with oil companies and traders. This is because Russia has been working since 2022 on building its own commodity trading systems.

They have developed their own system of bringing oil to the market.

Tornqvist said that Russia will likely prioritize regaining access the Western banking systems and payment systems in order to facilitate trade during sanctions negotiations.

"If sanctions were lifted, we would definitely consider if Mercuria could bring value," said Mercuria's CEO Marco Dunand. (Reporting done by Robert Harvey and Dmitry Zhdannikov. Mark Potter edited the article.

(source: Reuters)