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Vitol's $160 million bribery settlement
The licensed traders
The two firms received OFAC licenses to handle Venezuelan crude exports. Vitol alone trades roughly 8 million barrels of oil per day globally. Both have historically operated in some of the more opaque corners of the global energy market.
Their past scandals
Vitol paid over $160 million in 2020 to settle bribery charges in Brazil, Ecuador, and Mexico. Trafigura was involved in a toxic waste dumping scandal in Ivory Coast and has faced allegations of sanctions evasion in multiple jurisdictions.
The choice routed a nation's entire oil revenue through these two firms, rather than through established national oil companies or transparent government channels, and it raised some eyebrows.
How do commodity traders make their money?
Traders buy oil in one place and sell it in another, earning the spread through shipping, storage, and financing as well as price moves. Most do not own much oil production themselves. They act as intermediaries who take on logistical and price risk for producers and refiners. Many of the largest trading houses are privately held, which means they tend to disclose less than listed oil majors.
How do licenses let sanctioned oil move?
The Treasury's Office of Foreign Assets Control administers US sanctions, which prohibit dealings with listed parties. The office can issue licenses that authorize specific transactions under stated conditions. Those conditions can cover payments and reporting, and licenses can be amended or revoked. Specific licenses are granted to a named applicant, while general licenses cover anyone who meets their terms.
Why would a state hire traders to sell crude?
Trading houses have shipping, storage, financing, and buyer networks that span the globe, and they can move cargoes quickly. National oil companies in many exporting countries sell part of their crude through traders under supply agreements. Traders also provide prepayment, advancing money against oil to be delivered later. Exporting countries have long used such oil-backed prepayment deals.