Goodbye Geneva? Dubai becomes new hub for Russian oil trading

The Western embargo, aimed at diminishing Putin’s war chest, has re-drawn the world map of Russian oil. Dubai, which doesn’t impose sanctions, has now supplanted Geneva, as an on-the-ground investigation by Public Eye shows. According to customs data, small opaque businesses, recently registered in the Emirati tax haven, are now among the main buyers of Russian crude oil. The larger Swiss traders have, for now, taken a back seat. The exception is Litasco, which continues to sell oil from its parent company Lukoil. Among increasing global tensions, Switzerland’s sanctions enforcement agency SECO must clarify the grey areas relating to the implementation of this historic embargo.

The United Arab Emirates did not adopt the Western sanctions against Russian oil in December 2022. In contrast to Swiss traders, Dubai-registered companies do not have to comply with the price cap of 60 US dollars for a barrel of crude to continue to trade with Moscow. Since the invasion of Ukraine, dozens of companies that operated from Geneva have therefore reinforced their presence in the Emirati capital or registered a new entity. According to interlocutors we met in in Dubai in October, most traders have chosen the Dubai Multi Commodities Centre (DMCC), a free trade zone with favourable tax rates and minimal compliance procedures.

Until February 2022, 50 to 60 percent of Russian crude oil was traded from Switzerland, essentially from Geneva, according to our estimates. Data from Russian customs analysed by Public Eye show that between January and July 2023 companies registered in Dubai bought more than half of the announced export volumes from the four main Russian harbours with a value of at least 14 billion US dollars. Six of the ten largest private buyers of Russian crude oil transported by sea are based in the United Arab Emirates. Demex Trading Limited DMCC, Amur II FZCO and Tejarinaft FZCO are among the often opaque newcomers. As Bloomberg reported, the last two companies are allegedly linked to a former business partner of Rosneft, who is currently under investigation in the United States on suspicion of having circumvented oil sanctions.

The Swiss trading giants Trafigura, Vitol and Gunvor – all former key partners of the Kremlin - are now virtually absent from this sensitive market, despite being discreetly encouraged to participate by Washington in Spring 2023. A notable exception is Litasco Middle East DMCC, which continued to distribute large quantities of oil products from its parent company Lukoil. In Geneva, Litasco SA also continued its purchases of Russian oil, at least until July 2023. The company says that it "complies with all applicable laws and regulations," and stresses that its activities are "completely separate" from its Dubai-based entity.

Given the increasing attractiveness of Dubai, there is a risk that traders based in Switzerland could use this new hub for business that is prohibited in Geneva. Swiss legislation does not explicitly define the territorial scope of sanctions, in contrast to that of the EU. The State Secretariat for Economic Affairs (SECO), in charge of sanctions enforcement, explains that "legally independent foreign subsidiaries of Swiss companies or Swiss nationals living abroad are in principle not subject to Swiss legislation". In such a complex environment, SECO should control that the "Chinese walls" put in place between Geneva and Dubai-based entities – to establish said "legal independence" – are not a mere smokescreen.

The case of Geneva-based oil trader Paramount Energy & Commodities SA, which appeared on the market right after the invasion of Ukraine (as reported by Public Eye), illustrates the risks for Switzerland: On 8th November, the United Kingdom imposed sanctions on its Dubai-based entity. According to the British Foreign Ministry, it is "known to employ opaque ownership structures and has been used by Russia to soften the blow of oil-related sanctions".

For more information contact:

Oliver Classen, Media director, +41 44 277 79 06,  
Manuel Abebe, Commodities expert, +41 77 455 42 34,