(Bloomberg) -- Away from the public eye. That’s where Russian crude is going as buyers tread carefully in their dealings with the pariah producer. 

The market is waiting to see if Russian firms such as Surgutneftegas PJSC proceed with monthly sell tenders for ESPO crude this week. The offers are unlikely to attract any bids, oil traders said, Instead, shipments at steep discounts will probably be marketed privately on a one-on-one basis. 

Surgut typically kicks off the ESPO trading cycle with a sell tender issued on the 14th or 15th of each month. No tender had been floated as of late Tuesday in Singapore. The market is also waiting to see whether Exxon Mobil Corp. will proceed with its monthly offerings of spot Sokol crude, which it used to sell to buyers across North Asia.

It’s still possible to buy Russian oil, but most in the market -- including banks, shipping firms and refiners -- are self-sanctioning. That’s expected to lead to the emergence of a two-tier structure, traders said.

A section of the market will be highly visible, such as the well-reported offers for the Urals and Sokol grades that have been made on platforms by S&P Global Commodity Insights and RIM Intelligence Co. They provide a useful snapshot of the cargo’s value, however notional, even as they’re met with a dearth of bids. 

There will also be another under-the-radar part, however, where workarounds are considered. Less visible methods of buying Russian oil could include open credit schemes, pre-payments and dealing in yuan, rupees or rubles. Some companies that take Russian oil in return for upstream investments may bring shipments back to their own refining systems or country, traders said.

India is considering workarounds to allow it to keep buying, according to government officials familiar with the matter. Chinese private refiners are also discussing ways to keep procuring with traders and intermediaries, while managing the challenge of securing vessels at affordable rates. 

The potential buyers will be keen not to put themselves in the same position as Shell Plc, which was forced to make an apologetic u-turn after its purchase of Russian oil and gas triggered widespread condemnation.

Those open to buying Russian oil are not only trying to avoid reputational damage or penalties. They’re also having to navigate financing as many banks stop issuing letters of credit. Payment and shipping are also problematic, traders said, although the willingness of sellers to offer open credit and flexible payment terms can overcome some difficulties. 

A typical sell tender involves sending out an email or fax to many potential buyers, specifying volumes and loading dates of cargoes. Bids are then sent and buyers informed if they’ve been successful, while details on the gap between their bid and the eventual selling price may also be disclosed. Interested traders will typically cross-check with one another after the fact, often piecing together details on the buyer and price after some verifications.

Oil from regimes hit by sanctions or restrictions tends to find its way back into the market via so-called leakages. Cargoes can be loaded onto a vessel that will later conduct a ship-to-ship transfer -- sometimes going dark by turning off their transponders -- to hide the true origin of the crude.

©2022 Bloomberg L.P.