It recently came to light and then was admitted by British oil company Shell that it chose to purchase a cargo of oil from Russia on Saturday, despite the fact that it stated that it divested from large shares across the Russian energy industry in the wake of Russia launching a full-scale invasion into Ukraine.
It was first reported on Friday by the Wall Street Journal that the massive energy figurehead bought an entire shipload of Urals crude oil, which equates to almost 100 metric tons worth of crude oil, from Trafigura Group Pte. Ltd, which is an oil broker which the Journal discovered was one of the biggest commodity traders and one of the largest exporters of Russian oil. The Journal went on to report that Shell was able to acquire this shipment of oil at an almost record-setting discount. The Trafigura Group had already failed to sell this particular shipment which allowed the British oil titan to snatch t up for a staggering $28.50 below the current standard Brent crude price per barrel, which come in as by far the largest discount in the record books. As of Friday, the Brent price closed at slightly more than $118 per barrel, as reported by Nasdaq.
While most of the Western allies, the U.S. included, have for the most part ignored the Russian energy sector when it comes to their campaign of punitive sanctions against Russia, many oil refineries have reportedly entirely dropped their usage of Russian crude oil due to the fact that they could not get funding to purchase any Russian oil, nor any ships willing to carry it. The massive embargo has ended up causing large congestion throughout the Russian supply chains, which has, itself, led to many producers cutting back on operations. The WSJ reported, highlighting their source that is close to Shell’s trading strategy, that the company was making use of Russian oil to plug gaps in their oil supply chain while it takes time to find other sources for its supplies.
As part of a release posted to its official Twitter account, Shell stated that it bought the oil in order to stop a disruption brewing across the oil supply chain, which confirmed the report from the WSJ. “Yesterday we made the difficult decision to purchase a cargo of Russian crude oil,” claimed Shell in its statement. “Our refineries produce petrol and diesel as well as other products that people rely on every day. To be clear, without an uninterrupted supply of crude oil to refineries, the energy industry cannot assure continued provision of essential products to people across Europe over the weeks ahead. Cargoes from alternative sources would not have arrived in time to avoid disruptions to market supply.”
The oil titan went on to state that it has been “in constant discussion with governments” about the implications of this invasion from Russia on the energy supply. “We have acted throughout in accordance with what we have understood was the intent to allow energy flows from Russia for the time being in order to provide security of energy supply,” stated Shell. “We didn’t take this decision lightly and we understand the strength of feeling around it. We will continue to choose alternatives to Russian oil wherever possible, but this cannot happen overnight because of how significant Russia is to global supply.” All the while, Shell put forth the promise to donate the profits it took from the sale of the Russian oil to a fund set up for humanitarian aid.
Read Shell's statement. pic.twitter.com/6mN7KVTiGc
— Shell (@Shell) March 5, 2022