In a rare legal fight, a former Russian energy industry insider has sued sanctioned oil traders who, according to Western officials, have become the most important middlemen enabling Moscow to sell its oil and fund its war in Ukraine.

Igor Soglayev alleges he teamed up in early 2024 with Moscow-backed traders known as the Coral network. The relationship soured after a tanker carrying tens of millions of dollars worth of diesel failed to deliver its cargo in Brazil. The two sides are now slugging it out in courts in Brazil and the United Arab Emirates, filings reviewed by The Wall Street Journal show. The U.A.E. court handling the main case hasn’t publicized the proceedings.

Soglayev, a former Deutsche Bank executive, notched a legal victory, despite receiving what he perceived as death threats over energy trades gone wrong. A U.A.E. judge issued a freezing order on more than $700 million of proceeds from the sale of Russian energy by Soglayev’s opponents.

“I realized I had been screwed,” Soglayev said in an interview. “I had been truly played.”The size of the freezing order underscores the sums of money at stake in the market for Moscow’s sanctioned oil and the lengths that executives with ties to Russian energy will go to get a piece of it. Russia remains one of the world’s leading energy exporters along with the U.S. and Saudi Arabia, selling more than $150 billion worth of crude and fuel each year.

To avoid Western sanctions, Russian oil exports have for the most part fallen under the control of a handful of middlemen from Azerbaijan and Russia. They are known in the industry and by Western officials as the Coral network, after a now-defunct trading firm where many of them used to work.

Led by little-known traders Etibar Eyyub and Tahir Garayev, Coral struck a secret deal with state-backed Rosneft to export much of Russia’s oil in the chaotic early months of the Ukraine war, The Wall Street Journal has reported. The network has since consolidated control of the market, moving tens of billions of dollars of oil annually on a fleet of tankers that form most of Russia’s shadow fleet.

The U.K. and European Union have sanctioned Eyyub, Garayev and several of their associates, plus dozens of trading and shipping firms they used to deflect attention from their activities. Eyyub said last year he considered the sanctions to be baseless, and that he had done nothing unlawful. A lawyer for Garayev has said the Azeri businessman hasn’t been involved in petroleum operations since 2022.

The Coral network sells crude that once headed to Europe, India and China. Russian diesel, meanwhile, flowed to Brazil, where the fuel powers haulage trucks. The Latin American country devours the fuel to power haulage trucks. Soglayev tried to get a piece of the action.

Soglayev’s career traces the recent economic arc of Russia. He commanded a military intelligence unit before leaving the army after the collapse of the Soviet Union. As private enterprise flourished in the 1990s, he joined with a Dutch businessman to import electronic goods.

After a stint in the U.S. working on Wall Street, he returned to Russia and got to know the petrochemicals industry from his perch at Deutsche Bank. That led to a job as chief executive of chemicals producer Sanors.

Rosneft bought Sanors in 2015. Soglayev became Rosneft’s top chemicals executive and an adviser to Rosneft boss Igor Sechin—now the patron of the Coral traders. Soglayev left two years later, and dabbled in various energy ventures.

When Russia’s export machine broke down after President Vladimir Putin invaded Ukraine, Sechin tapped Eyyub and Garayev to replace the Swiss and U.K. traders that used to handle Rosneft’s oil, the Journal has reported.

The lawyer for Garayev said he wasn’t aware of any legal proceedings with Soglayev. Eyyub couldn’t be reached for comment.

Soglayev says in filings he set up a firm called DIA33 in Dubai to flip Russian oil to foreign buyers. He set his sights on Brazil, where Russian diesel was displacing more expensive American fuel.

His goal was to make Russian fuel palatable to importers who worried that buying directly from Moscow could complicate their dealings with banks wary of violating sanctions. He booked storage space at Brazilian ports and planned to buy diesel from Russian exporters, then sell at a markup to fuel distributors.

The trading arrangements Soglayev entered into show the convoluted mechanisms that have kept Russian oil flowing beyond the gaze of Western officials. Soglayev alleges he bought Russian diesel from a small firm in Dubai called Serene Resources in late 2023.

He says its CEO, Andrey Romanovskiy, moved to a different company that was controlled by Eyyub and Garayev. Soglayev alleges Romanovskiy told him the Coral network operated through different shell companies to avoid international attention. Soglayev says they discussed the possibility that DIA might later merge with Coral to become its Brazilian trading arm.

A lawyer for Romanovskiy didn’t respond to questions. But in an affidavit reviewed by the Journal, Romanovskiy told a Dubai court his firm was independent, denied that it was controlled by Coral and disputed other details of Soglayev’s case.

Things went south after terminal operators in a Brazilian port rejected an aging tanker full of Russian diesel that Soglayev was supposed to sell, according to filings by Soglayev and some of his opponents. The ship dawdled for weeks, racking up bills, until a different harbor admitted it, according to the filings.

The alleged Coral traders who sold the diesel, frustrated that Soglayev hadn’t paid them, pursued him before an arbitration tribunal in Dubai, accusing him of having oversold his capabilities and effectively stealing the fuel. The tribunal earlier this year ordered Soglayev to pay one of the firms involved in the trade $42 million.

Soglayev responded with his own suits in Dubai and Brazil, alleging Coral ruined his business by approaching his clients and selling to them at discounted prices. The partnership, he claims, was a ruse for Coral to access DIA’s internal information. He claims he is owed more than $500 million in lost business.

Soglayev alleges he received what he perceived to be death threats, including a call from Eyyub to say he had discussed the dispute with a Chechen warlord.

In June, a judge in Dubai banned Eyyub, Garayev and 13 other firms and people from disposing of assets valued up to $704 million as the case moved forward. But he later said his court didn’t have jurisdiction, raising the possibility of the suit being tossed.

Soglayev has appealed to keep the case in the Dubai International Financial Centre, said his lawyer in the U.A.E., David McCoy of ADG Legal. The freezing order remains in place pending a decision on the appeal. A related lawsuit in Brazil is ongoing.