Trafigura's new deals with India: non-Russian barrels

Sunday 1 February 2026

In the normally opaque world of oil trading, a single phrase can reveal a great deal: “non-Russian barrels”. When a major commodity trader such as Trafigura, based in Geneva, Switzerland, offers an Indian refiner a structured stream of crude from elsewhere, it is doing more than filling tanks. It is selling continuity, compliance and optionality, at a moment when all three have acquired a sanction risk premium.

That, in essence, is the significance of Trafigura’s recent approach to supplying Indian refineries with crude that is not of Russian origin, as India’s buyers trim their exposure to Russia’s flagship export grade, Urals, amidst tighter scrutiny and the threat of punitive measures from the United States. 

A sanctions problem that looks like a shipping problem

Urals crude is not merely a blend of hydrocarbons. Since 2022, it has been a political instrument as much as a commercial one, discounted to entice buyers willing to accept reputational and legal uncertainty. Through much of the war Indian refiners made pragmatic use of that discount. They took Russian barrels, refined them into products and thereby reduced their import bill, even as Europe restricted her own direct consumption of Russian crude.

Yet sanctions pressure does not remain static. It evolves from blunt prohibitions into a web of risks: which ships can legally carry the cargo, which insurers will underwrite the voyage, which banks will process payments, which documents can be relied upon, and which counterparties might suddenly become toxic if a new designation lands on a tanker owner or a trading intermediary. Those are the mechanics by which a state can deter commerce without necessarily declaring a full embargo.

Against that backdrop, Indian refiners have been adjusting purchasing patterns away from Russia, while still leaving room for “sanctions-compliant” Russian flows where they judge the paperwork, logistics and counterparties to be less risky. 

Trafigura’s proposition: replace the risky barrel, not the refinery

Reuters reporting indicates that from April, Trafigura is set to supply Bharat Petroleum Corporation Limited with term cargoes of Oman crude, alongside at least one parcel of Basrah Medium from Iraq, priced off regional benchmarks at specified discounts. The point is not that Omani and Iraqi crude are novel to India. The novelty is the timing and the framing: these are contractually defined non-Russian alternatives offered precisely as refiners look for cover from the uncertainty that has begun to surround Urals.

In parallel, Reuters has reported a renewed push for Venezuelan barrels to re-enter India’s import mix, with traders, including Trafigura, marketing crude released under United States-directed arrangements following Washington’s assertion of control over Venezuelan oil flows. Even where the volumes are limited, the episode illustrates the same broader reality: when politics drives the constraint, traders sell access and routing as much as molecules.

Why a trader matters in a world of sanctions

To understand why a Trafigura proposal carries weight, one must understand the function of a large physical trader in the modern oil market.

A refiner ultimately needs a cargo to arrive at a particular port, on a particular date, with a crude slate that its units can process efficiently. The refiner may buy directly from a national oil company, but it often relies on traders for flexibility: to source barrels from multiple origins, to assemble freight, to manage demurrage risk, to provide credit, to hedge price exposure and, crucially in a sanctions environment, to package the transaction in a way that is legally and reputationally defensible.

This is not, at its core, about moral virtue. It is about reducing operational risk. A term deal that supplies predictable non-Russian crude allows an Indian refiner to keep her refinery running at high utilisation without the constant anxiety that a cargo might be delayed by insurance complications, payment rejections or sudden counterparty blacklisting.

The sanctions environment also changes what “cheap” means. A discounted Urals cargo can become expensive if the only available tanker is costlier, if insurance is constrained, or if a payment route introduces delays that shut down a refinery unit. A slightly higher-priced Omani cargo delivered smoothly can be cheaper in the only sense that matters to a refiner: the cost of keeping the plant operating without interruption.

India’s balancing act, and the politics of alignment

India’s energy policy is often described as non-aligned, but in practice it is deeply aligned with her own interests. New Delhi has reason to preserve optionality with Russia, especially if discounted supply reduces fiscal strain. She also has reason to signal responsiveness to Washington when trade, technology cooperation and the broader strategic environment demand it. Reuters has described India’s reductions in Russian crude imports as part of a diversification effort that could assist wider trade discussions with the United States. 

Traders sit in the middle of this, translating geopolitics into contracts. Trafigura's supply of non-Russian barrels is indirectly a tool that allows India to adjust her posture without dramatic public declarations. She can buy less Urals, more Middle Eastern or Atlantic Basin grades, and present the shift as straightforward commercial optimisation rather than geopolitical capitulation.

Russia meanwhile is compelled to compete on discount and flexibility. Reports of sharply increased Urals discounts for India underline how far Moscow may have to go to hold market share when buyers feel exposed to sanctions risk. 

A brief history of Trafigura: post–Cold War trader, twenty-first century infrastructure owner

Trafigura is a product of the post–Cold War moment, founded in 1993 by a group of traders including Claude Dauphin and Eric de Turckheim after they left Marc Rich’s orbit, building a new house aimed at exploiting dislocations in global commodity flows. Its rise is inseparable from the broader ascent of privately held commodity traders who prosper by arbitraging geography, finance and logistics.

Over time Trafigura expanded beyond pure trading into assets that support trading: storage, terminals, shipping arrangements and associated infrastructure, a pattern typical of major trading houses seeking greater control over supply chains and optionality in stressed markets. 

Her history also contains controversy. The Probo Koala incident in Ivory Coast in 2006, involving waste disposal linked to a ship chartered by Trafigura, became one of the most notorious environmental and legal episodes associated with a commodity trader. Trafigura’s own published account records substantial payments in settlements and remediation connected to the episode. This matters here not as a diversion into scandal but as a reminder of why large traders are acutely sensitive to legal exposure and reputational damage: their business model depends upon banks, insurers and regulators trusting that the paperwork is real and that risk is contained.

That same institutional instinct is visible today. In a sanctions-heavy environment, the trader who can provide compliant barrels, documented origins and reliable logistics is not merely a middleman. She is an organiser of the transaction itself.

What this means for Ukraine, and for the war economy

From a Ukrainian perspective the question is not whether India buys Russian crude at all. It is whether the total net revenue flowing to Russia from oil exports can be constrained without producing a global price shock that fractures the coalition supporting Ukraine.

A move by Indian refiners to purchase fewer Russian barrels, and to substitute them with Middle Eastern or other non-Russian supply arranged by traders, contributes to that constraint at the margin. It forces Russia to accept deeper discounts, longer voyages and more complex logistics. In the aggregate, those frictions reduce the efficiency with which Russia monetises her key export, and they complicate the state’s capacity to finance prolonged war. 

But it also illustrates a hard truth: sanctions rarely work by stopping trade outright. They work by making trade expensive, uncertain and administratively exhausting. When Trafigura offers BPCL a stream of Omani and Iraqi cargoes, it is offering a practical escape route from that exhaustion. 

The quiet power of substitution

The oil market is often narrated in terms of grand strategy, but it is built from substitutions: one barrel replaced by another, one shipping route replaced by another, one payment channel replaced by another. These substitutions are where sanctions either bite or fail.

Trafigura’s proposal to supply non-Russian barrels to Indian refineries is therefore best understood as a sign of market adaptation. India is not necessarily abandoning Russian crude as a matter of ideology. She is adjusting to a shifting risk map in which the “cheap” Urals barrel may carry hidden costs. Traders, for their part, are monetising the ability to source alternatives quickly, to provide freight and to reduce legal uncertainty.

If the war has taught Europe anything about energy, it is that dependence is rarely recognised until it becomes dangerous. India is now conducting her own, quieter version of that recognition, assisted by the traders who specialise in turning geopolitical pressure into deliverable cargoes.