Our flag means cash: The Latvian trader abetting Russia’s billion-dollar oil sanctions evasion

The price cap is a restrictive measure designed to limit Russian budget revenues from crude oil sales without causing a global price surge. Western companies are prohibited from servicing Russian oil sales (that is, providing brokerage, transportation, and insurance services) if the price of the transaction exceeds $60 per barrel. Russia, however, continues to receive the oil revenue it needs so badly for its war in Ukraine due to the fact that many European intermediaries have moved their businesses to Dubai, where they continue to trade in market priced Russian oil. The Insider analyzed these legal entities and found EU citizens among their management.

One of the largest buyers of above-the-cap Russian oil is Latvian national Aleksejs Haļavins, who was found to have ties to three Dubai-based entities: Black Pearl Energy Trading LLC, which he owned and headed, along with its affiliates OGC Shipping LLC and Conmar Maritime. In 2023, the first two companies bought roughly 38 million barrels of oil from Surgutneftegaz at an average “above-the-cap” price of $82 per barrel. For the period from January to May 2024, customs records show only the activities of Black Pearl Energy Trading, which purchased over 20.6 million barrels of oil at an average price of $83.7 per barrel.

As a result, Surgutneftegaz alone received roughly $1.4 billion more in revenue than it would have by selling its oil at the price cap rate. The total yearly additional revenue to the Russian budget from oil sales bypassing the cap is estimated at $7-11 billion — a significant boost to the Russian war machine.