Sanctions on Russian oil: Switzerland's enforcement refusal leaves its traders to regulate themselves

The war in Ukraine disrupted a long love story between Geneva and Russia’s black gold. Swiss traders, formerly key partners to Putin’s regime, have had to distance themselves while small companies have emerged on an increasingly opaque market. Exclusive data obtained by Public Eye shows that since the Russian invasion, Geneva-based Paramount Energy & Commodities and an almost eponymous entity in Dubai have collected 72 million barrels of crude oil from the port of Kozmino, in the far east of Russia. In contrast to Brussels, London and Washington, Switzerland's State Secretariat for Economic Affairs (SECO) refuses to enforce the import embargo and price cap against Russian oil.
© Opak

In one year of war in Ukraine, the cards of the oil market have been redistributed. An historic embargo on Russian oil has been announced in a bid to close the tap on one of Putin’s main sources of finance. Since December 2022, the import of seaborne crude oil has been banned and a price cap has been imposed on its trade in 40 Western countries, including Switzerland. Before the invasion of Ukraine, Europe was the main recipient of Russian oil. Public Eye estimates that 50 - 60% of it was traded from Switzerland.

A new Public Eye investigation draws on exclusive data and insider testimonies to outline how the market has fragmented and is becoming increasingly opaque. For decades, giants like Trafigura, Vitol, Glencore and Gunvor were the Kremlin’s favourite traders. They offered loans to the Russian oil industry in exchange for huge quantities of barrels or took stakes in projects or companies. Since the invasion of Ukraine, they have had to distance themselves, which paved the way for Russian and Chinese state-owned companies and small companies with unknown shareholders. These new actors – nicknamed ‘pop ups’ – mostly operate from Dubai or Hong Kong, two jurisdictions that have not adopted sanctions against Russia. They are suspected of operating on behalf of or with the support of larger companies that want to discreetly continue trading Russian oil.

Public Eye had access to data from the Russian port at Kozmino, from where the crude oil blend ESPO is exported to Asia. From summer 2022, the large trading houses have disappeared from buyers’ rankings while another Swiss company, Paramount Energy & Commodities, has managed to establish itself. From March 2022 to February 2023, this trader exported 10 million tonnes (72 million barrels) of Russian crude, or an average of eight tankers a month. Shortly after the start of the war, Public Eye published a profile of this Geneva-based trader whose favourite playground is Russia and the countries of the ex-Soviet Union. According to Global Witness and the Financial Times, in June 2022 the trader handed over the business to an entity in Dubai, Paramount Energy and Commodities DMCC. Although seemingly an independent company, a Swiss citizen is registered as its director.

The price cap mechanism is designed to allow Western operators (traders, transport companies, insurers) to continue doing business in Russian oil, as long as they buy it at less than USD 60 per barrel and sell it in countries that do not apply the sanctions. By aligning with the European Union sanction regime, Switzerland has adopted this mechanism. However, in contrast to the EU, the US and the UK, the Swiss sanctions enforcement authority SECO does not intend to actively control whether companies are complying. SECO confirmed to Public Eye that it is neither undertaking audits nor imposing a requirement for transactions to be documented, counting on the goodwill of the industry to regulate itself.

Moreover, Swiss sanctions law does not apply to Swiss nationals living abroad, unlike European and US legislation. An invitation for the globally active traders to circumvent sanctions by making slight changes to their organisational structures. This laissez-faire attitude aligns with the government’s policy approach to date, which seeks to maintain the attractiveness of its trading hub at all costs.

For more information click here or contact:

Oliver Classen, Spokesperson, +41 44 277 79 06,

Robert Bachmann, Commodities Expert, +41 44 277 79 22,