Shell to stop buying Russian oil, apologizes for purchasing cargo

Ines Ferré

Shell (SHEL) says it will stop buying Russian crude and apologized for purchasing a cargo last week amid the ongoing Russian invasion of Ukraine.

“We are acutely aware that our decision last week to purchase a cargo of Russian crude oil to be refined into products like petrol and diesel – despite being made with security of supplies at the forefront of our thinking – was not the right one and we are sorry,” Shell Chief Executive Officer, Ben van Beurden said in a company statement.

The oil giant announced it will withdraw from its involvement in all Russian hydrocarbons, including crude oil, petroleum products, gas and liquefied natural gas in a phased manner.

“As an immediate first step, the company will stop all spot purchases of Russian crude oil. It will also shut its service stations, aviation fuels and lubricants operations in Russia,” said Ben van Beurden.

Last week, Shell purchased 100,000 metric tons of Russia’s Urals crude, reportedly at a steep discount.

LOS ANGELES, CALIFORNIA - MARCH 07: High gas prices are displayed at a Shell station on March 7, 2022 in Los Angeles, California. The average price of one gallon of regular self-service gasoline rose to a record $5.429 yesterday in Los Angeles County amid the Russian invasion of Ukraine. (Photo by Mario Tama/Getty Images)
LOS ANGELES, CALIFORNIA - MARCH 07: High gas prices are displayed at a Shell station on March 7, 2022 in Los Angeles, California. The average price of one gallon of regular self-service gasoline rose to a record $5.429 yesterday in Los Angeles County amid the Russian invasion of Ukraine. (Photo by Mario Tama/Getty Images) (Mario Tama via Getty Images)

Although sanctions against Russia have not specifically targeted energy transactions, much of the Western market has shunned Russian crude oil, sending its price lower compared to Brent.

“It's become toxic,” Andy Lipow, president of Lipow Oil Associates, told Yahoo Finance. “I call it the 'de facto ban' on Russian oil.”

The Biden administration could ban Russian crude imports as soon as today. The move is largely seen as symbolic within the industry, since Russian oil accounted for around 3% of all crude imported into the U.S. last year.

Shell says it will commit profits from the remaining amounts of Russian oil from its purchase to a dedicated fund.

“We will work with aid partners and humanitarian agencies over the coming days and weeks to determine where the monies from this fund are best placed to alleviate the terrible consequences that this war is having on the people of Ukraine,” said Van Beurden.

Ines is a stock market reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre

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