Oil Traders Shun Lukoil’s Trading Arm on Sanctions Fear

(Bloomberg) -- Some oil traders are actively avoiding transactions with Litasco SA, the trading unit of Russian oil producer Lukoil, fearing their products will get stranded if sanctions are imposed, according to people familiar with the matter.

While Lukoil has called for a fast resolution to the conflict through diplomacy, that hasn't stopped oil traders at other companies fretting over the company's Russian connection, the people said. 

Litasco declined to comment. 

Concerns that sanctions against Moscow may widen to include oil and gas have rattled energy markets, prompting some traders to avoid taking Russian crude and fuel. While the U.S. and European Union have so far stopped short of targeting Russia's energy exports, traders have been grappling with surging tanker rates and difficulties with financing. So-called self-sanctioning is gripping the market.

The pullback in trading with Litasco risks creating further chaos in an oil market that's already seen crude prices surge near $120 a barrel -- the highest in over a decade. It wasn't immediately clear what would be the financial impact from counterparties pulling back or what Litasco's response has been.  

Litasco is a major trader of crude oil and refined petroleum products and deals with a vast range of suppliers and customers, including the world's major oil corporations, according to its website. Northwest Europe, the Black Sea, and the Mediterranean region have traditionally been Litasco's key markets, according to the website. 

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