Russia’s oil business takes a hit from fight between top traders

Rosneft PJSC’s oil storage tanks in Tuapse, Russia. (Source: Bloomberg)

A rivalry at the heart of Russia's oil trade is threatening the crucial operations the Kremlin relies on to fund its war in Ukraine, just as the US cranks up the pressure on Moscow.

The two players who are estimated to move the vast majority of the state-owned Rosneft PJSC’s crude have been trying to expose each other's Russian links in a bid to trigger Western sanctions, according to people familiar with the matter and documents seen by Bloomberg News.

The dispute between Murtaza Lakhani, a veteran oil trading tycoon, and two Azeri competitors, Etibar Eyyub and Tahir Garayev, is costing Rosneft and the Russian state billions of dollars in increased costs and discounted prices, according to the people and documents, and has even landed on the desk of CEO Igor Sechin.

With the US this week hitting Rosneft itself with sanctions for the first time, and the Russian economy stuttering more than three years after the full-scale invasion of Ukraine, President Vladimir Putin can ill-afford new problems for the fleet of tankers that skirt Western sanctions. Crude is down about 20% from its January highs and Rosneft's first-half income fell 68%, putting Sechin under pressure already. The feud between his critical business associates poses a further risk to Rosneft’s finances and the Kremlin's war chest.

US President Donald Trump this month urged Putin to end the war in Ukraine or face an economic collapse, but Kremlin spokesman Dmitry Peskov said that the country has “considerable reserves of strength” that will allow it to pursue all its plans. This story is based on information from people with knowledge of Russia’s oil operations, private documents and analysis of trading data by industry experts reviewed by Bloomberg News. They were granted anonymity discussing confidential business dealings.

Garayev’s lawyers denied that he has any relationship with Rosneft or Eyyub and that he had made any efforts to damage Lakhani’s reputation. They also said that he has not been involved in any petroleum-related activities since late 2022.

A Rosneft spokesperson said that all of the company’s partners have solid reputations and hold strong positions in the global market but they couldn’t rule out the possibility that some people might spread false information to advance their own interests. “A capitalist will commit any crime for the sake of excess profit,” the company said in an email.

Representatives of Lakhani’s company weren’t immediately able to comment. Lakhani has previously denied any involvement in the network of companies Russia has been using to trade its oil outside of the sanctions regime. Representatives for Eyyub’s companies didn’t respond to a request for comment and nor did Peskov.

The struggle between the rival traders spans operations in Dubai, Hong Kong and Singapore to lobbyists in Washington and the Moscow press.

It has seen associates of Eyyub and Garayev attempt to plant stories about Lakhani's dealings with Rosneft in Russian newspapers with the aim of highlighting activities that might lead Western authorities to impose sanctions, according to the people and documents.

Coral Energy, the trading company set up by Garayev in 2010, last year turned to a Washington-based commodities lobbying firm with the ultimate goal of alerting officials in the US and Europe to rival operations, including Lakhani's, the people said.

But Eyyub and Garayev have also been the target of similar tactics from Lakhani, who has made his own efforts to put his rivals on the radar of the authorities, according to people familiar with the matter. The Azeris have been frustrated that they'd come under scrutiny from Western governments, something Lakhani has largely avoided, and they wanted to level the playing field, the people said.

The strategy has been used before in the murkier corners of the oil trade. Publicizing activity that a competitor wants to keep out of the spotlight can help spur governments into action and make middle men involved in the trades wary enough to either walk away or impose hefty risk premiums.

There are signs that it may be working in this case.

Sanctions imposed by the European Union and UK on the Azeris' network since 2024 have damaged Eyyub and Garayev's ability to operate, increasing the cost of each trade and causing Western banks, insurers and professional services firms to largely avoid them so they themselves don't also come under the eye of the authorities, according to people with direct knowledge of the operations.

It’s forced the network to pay higher insurance premiums, accept longer and more opaque shipping routes, and reduce its price per barrel as brokers, refiners, storage operators and ports either refused to trade with them entirely or raised costs to protect themselves, the people said.

It also hit Rosneft’s revenue, forcing it to offer further discounts for its oil and look for other more expensive tanker arrangements, according to the people and documents. The cost for the Azeri traders, Rosneft and the Russian state, from the dividend it receives from the state-owned company, has run into billions of dollars, they said.

“These disputes expose how fragile Russia’s sanctions-bypass system really is,” said Tatiana Mitrova, a veteran of Russian oil and gas markets now at the Center on Global Energy Policy at Columbia University. “The Kremlin depends on a handful of opaque intermediaries to move its oil and collect hard currency. When they start fighting, it threatens billions in export revenue and reveals how little control Moscow actually has over these offshore networks."

Battle for Dominance
Their names mean little outside the oil industry, but Lakhani, Eyyub and Garayev have been entrusted with keeping hundreds of millions of barrels of Russian crude flowing since Putin launched his most recent assault on Ukraine in February 2022.

Lakhani has long been a go-to trader in some of the oil market's most challenging jurisdictions. After the first Gulf War, he branded himself Glencore's "man in Baghdad."

His relationship with Sechin and Rosneft deepened after the war in Ukraine began in 2022 as he steered Russia's global oil business around Western sanctions, Bloomberg has reported. Lakhani used a network of mostly newly-created companies, many based in the United Arab Emirates, to keep the trade going with countries such as China and India. Lakhani has previously denied any involvement in the trade.

By the start of 2024, his dominant position had come under threat as Eyyub and Garayev emerged as the ambitious rising stars of the Russian oil trade.

Their network, operating through offshore companies such as Coral, which was rebranded as 2Rivers, has rapidly grown in stature to supplant Lakhani as the main trader in Rosneft oil. It capitalized on the gaps left by the exit of major Western traders from the Russian market, aided in part by Eyyub and Garayev's connections in the Azeri government.

Like Lakhani before him, Eyyub in particular cultivated close ties with Sechin and Rosneft. Russian media reported that he attended the funeral of Sechin's son in 2024, in a sign of his influence within the Rosneft world.

The Azeris' swift rise led quickly to European sanctions. The UK’s National Crime Agency named both men in a “red alert” against their operation in July 2025, a warning for banks, traders, and others to review their exposure to the Azeri network. The NCA said that in 2024 the network handled “more Russian oil than any other entity” — including the majority of Rosneft’s crude.

After paring back some of his activities as the Azeris were on the up, Lakhani has re-entered the fray this year, according to people familiar with the matter, re-emerging as the key go-between out of Dubai as the Azeris shifted operations away from the Gulf.

In June, he attended the St. Petersburg International Economic Forum, an annual Russian business event that serves as a critical platform for business leaders and political figures to consolidate power and influence.

Lakhani's revival, and the Azeris' irritation that most of his network remained mostly unsanctioned, led them to ramp up the hostile briefings in recent months, according to people familiar with the matter, adding another major problem to those already piling up for Sechin.

In another context, using a narrow pool of intermediaries might have helped Sechin keep control. Instead, it's left him vulnerable to the behavior of traders who appear more focused on personal profit than keeping Russia's oil taps open.

"It’s a symptom of growing stress inside Russia’s wartime economy," said Mitrova at Columbia University.