Shell PLC has snapped up a cargo of Russian crude at a bargain price, ending a self-imposed embargo on Russian oil by the international energy industry.
Shell bought 100,000 metric tons of Russia’s flagship Urals crude on Friday, according to people familiar with the transaction. It paid $28.50 a barrel below the price of international benchmark Brent crude, the widest discount on record.
London-listed Shell bought the crude from Trafigura Group Pte. Ltd., one of the biggest commodity traders and largest exporters of Russian oil. Trafigura had failed to sell the cargo this week before drawing a bid from Shell after dropping the price to a massive discount.
As Western oil-and-gas companies this week raced to distance themselves from Russia in the wake of the invasion of Ukraine, Shell said this week it would exit its joint ventures with Russian energy giant Gazprom PJSC. A person familiar with the company’s trading strategy said Shell was still buying Russian oil to plug into refiners and petrochemical plants while it looked for alternative sources.
The U.S. and its allies left energy out of the sanctions imposed on Moscow in response to the invasion. However, refiners went further, shunning Russian crude as they struggled to get funding and ships to export Russian oil.
Self-sanctioning has taken a chunk out of global supplies, pushing prices for international benchmark Brent up to $113.80 a barrel. Traders say it is causing a backup in Russia’s energy supply chain, prompting refiners to cut back production.
