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For decades, the Swiss city of Geneva has been the center of Russian oil trade, but Western sanctions have turned Dubai – apparently irreversibly – into the new world trading center.
The war in Ukraine not only changed the geopolitical balance, but also revolutionized entire financial sectors. One of them is Russian oil trade. For decades, the Swiss city of Geneva was home to merchants who sold Moscow’s oil around the world. Switzerland has joined the sanctions imposed on Putin by the West, banning imports to the EU, the UK, and other countries that apply G7 rules, such as Switzerland.
Trade and merchants then moved to Dubai and other cities in the United Arab Emirates.
Prestigious Financial Times newspaper analyzed Russian customs documentation and calculated that the Gulf countries acquired at least 39 million tons of Russian oil worth $17 billion. Part of the oil ended up in the United Arab Emirates, but most of it, 90%, never touched Arab soil, going straight to the ports of Asia, Africa, and South America.
Trade with the UAE had already seen a surge before 2022, but the invasion of Ukraine happened to be a game-changer – before and after – for Russian oil trade. The trade boom has enriched the country, and with billions of dollars of oil, it has built infrastructure and attracted dozens of companies to its free trade zones.
Heads of commercial companies that were contacted by Financial Times confirm that Dubai has become the main commercial center of the UAE. Many are also attracted by the fact that it is one of the last remaining places in the world where you can live tax-free, so Dubai managers are confident that it will become a world center for commodity trading.
To prove the rapid growth and development of the market, it suffice to say that of the 104 buyers of Russian oil listed on Russian customs declarations for January through April, at least 25 companies are registered in the Dubai Multi-Commodity Center.
The largest buyer of Russian oil during this period has been Litasco Middel East DMCC with 16 million tons of Russian oil and oil products. What is surprising is that the company previously had only one representative office in the UAE, and now it has an entire floor in a Dubai skyscraper. Litasco SA stated that Litasco Middle East “is no longer a subsidiary.” Demex Trading and Qamah Logistics are also impressive. They are among the largest traders of Russian oil, but both have only a three-year history.
The boom associated with the war in Ukraine has brought Russian oil to Dubai into a network of unknown owners with somewhat obscure corporate structures that move billions of dollars of oil every month. Ben Higgins, an investigative specialist from Dubai, explains in an interview with the Financial Times that behind these companies that are “registered in various free zones in Dubai, there are little known target structures, and their owners on paper are not Russian citizens. Deeper research and analysis often lead to Russia.”
The movement of billions of dollars is creating a pole of trade and infrastructure that certainly emerged from the Russia-Ukraine conflict but is destined to remain and change trade routes forever. Sooner or later the war will end, and so will this boom, but the landscape of the oil trade by now has changed irreversibly.
