World's top oil trader will stop buying Russian crude

London(CNN Business) Vitol Group, the world's top independent oil merchant, will stop trading Russian crude oil and products by the end of the year, a source with knowledge of the situation told CNN.

The Dutch energy and commodities trading company will also not enter into any new Russian crude and product transactions, the source said.

Vitol declined to comment beyond confirming the accuracy of an article published by Bloomberg, which reported the news earlier.

Since Russia invaded Ukraine in February, the United States, United Kingdom, Canada and Australia have all announced bans on Russian oil.

Major companies including Shell, TotalEnergies and Neste have also stopped buying Russian crude, or have said they will do so by the end of 2022, and a wider de facto embargo has taken hold as banks, traders, shippers and insurance companies try to avoid falling foul of Western financial sanctions.

As Russian oil has become toxic for many buyers, its benchmark Urals crude has traded at an ever wider discount on the world market. It's now worth $34 a barrel less than Brent crude.

The International Energy Agency estimated on Wednesday that supplies of Russian oil will drop by 1.5 million barrels a day in April, and could fall by as much as 3 million a day from May as buyers turn away.

"While some buyers, most notably in Asia, increased purchases of sharply discounted Russian barrels, traditional customers are cutting back," the agency said. "For now, there are no signs of increased volumes going to China."

Vitol's revenues almost doubled last year to $279 billion as global demand for oil bounced back after economies reopened from their pandemic lockdowns. The company traded 7.6 million barrels of crude and other oil products a day last year, according to its website.

That's more than Russia's daily exports of crude oil, which the IEA estimated at about 4.7 million barrels in 2021. Of that, about 2.4 million barrels per day went to Europe.

But there are signs that the European Union could be next to ditch Russian oil. Last week, European Commission President Ursula von der Leyen said the bloc was considering an oil embargo as part of a fresh round of sanctions.

The cumulative impact of this widening embargo could be higher oil prices globally as buyers scramble to replace supplies. Russia is the world's second-largest crude oil exporter, behind Saudi Arabia, and accounted for 14% of global supply last year, according to the IEA.

The price of Brent crude, the global benchmark, soared in early March to briefly pass $139 a barrel — a 14-year high — but has since fallen back down to around $107.

The coordinated release of 240 million barrels from the United States and IEA member countries could help ease prices and make up for a loss in supplies of Russian crude.

— Chris Liakos contributed to this article.