Greece buys Russian oil from Vitol as Iran embargo nears

Oil trader Vitol sold a cargo of Russian Urals crude to Greek refiner Hellenic Petroleum in a rare tender, traders said late on Monday as the country is taking further steps to cut imports of Iranian crude ahead of an EU-wide embargo.

Greece turned to Iran as a supplier of last resort last year despite pressure from Washington and Brussels to end trade as part of a campaign against Tehran’s nuclear program. The West says the nuclear program is for arms, while Iran says it is for energy.

Greece relied on Iran for more than half of its oil imports some months last year after traders and oil majors pulled the plug on supplies and banks refused to provide financing for fear that Athens would default on its debt.

The outlook on Greece has changed after Athens clinched a landmark second bailout program in February although traders said banks were still very wary of dealing with Greece.

“The tender was on open credit terms. So we could not participate as banks are still reluctant to deal with Greece on open credit terms despite all the noise about easing default fears,» said one trader, adding that Hellenic was absent from the market with Urals tenders for many months.

Vitol declined to comment. Hellenic Petroleum officials were unavailable for comment.

Hellenic acknowledged last month it was buying oil from Iran and paying for the shipments later, terms known in industry jargon as open credit terms. But the refiner also said that replacing Iranian oil would be «easy» with supplies from Saudi Arabia, Iraq and Russia.

As pressure on Greece is increasing to cut imports of Iranian oil ahead of July, when a EU embargo comes into force, the tender victory puts Vitol neck and neck with other major traders who are exploring ways how to boost supplies to Greece but minimize financial risks.

Traders told Reuters in February that Swiss-based Totsa, the trading arm of French oil major Total, and trading house Mercuria were in separate negotiations with Hellenic to help it replace Iranian crude.

Glencore, a leading Swiss-based commodities trader and one of the few that conducted business with Greece during the debt crisis, may also boost supplies, trading sources said.

Hellenic would pay back the traders with refined products, which could then be sold in Greece or abroad. [Reuters]

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