We will divide this question into the following different possible models of business interaction and analyze each one according to its halachic logic and sources: 1) Shimon acted as a shaliach (an agent) on your behalf, for free or, more likely, for some form of profit; 2) Shimon acted as Levi’s shaliach to make agreements with customers and collect and deliver the money; 3) Shimon acted as a business, which paid Levi for oil and its delivery to destinations of his choice and received money from consumers for assuring the same.
If Shimon was your shaliach, you have a natural obligation toward Levi due to the fact that he gave you his oil at your request (through your agent, Shimon). The question is whether anything exempts you from having to pay Levi under the current circumstances. The mishna[1] says that if Gad asks Asher to send him an object that he wants to borrow by means of Yissachar, once the object enters Yissachar’s hands, Gad assumes full responsibility for it. If Gad did not instruct Asher how to send the object, Gad is not responsible for it until it enters his possession. The lesson from the mishna, which can be applied to various scenarios, is that the party represented by the middleman who transfers the object is responsible for it while it is “in transition.” The poskim[2] apply this idea to sending payment for a loan through a courier. Similarly, in the case at hand, if Shimon served as your agent to bring your money to Levi and instruct him to deliver oil to you, then if Shimon stole the money, he stole it from you; there is thus nothing to exempt you from owing Levi. However, if Shimon served as Levi’s agent to arrange for his sales and collect his charges, then once Shimon received the money, it is as if you had paid Levi; the fact that Levi’s representative pocketed money due to Levi is Levi’s problem.
Let us consider the possibility that Shimon is a separate business entity, serving as a middleman. In that case, he would have two business relationships: between you and him and between Levi and him. If so, he got what he wanted from you (the money) and provided you with the service you deserved (a delivery of oil). Shimon’s wrongdoing was in his relationship with Levi. He received what he requested from Levi (oil for his customer), but did not keep his part of the deal with Levi (paying him). It follows, then, that Shimon stole from Levi, not from you, and Levi has to deal with the consequences.
But don’t you owe Levi directly in any case because you benefitted from his oil? Consider the following case discussed in the gemara.[3] Dan told Naftali to work in Zevulun’s field, and it was Dan, not Zevulun, who took responsibility regarding Naftali’s pay. Dan has to pay Naftali at the rate they discussed, and Zevulun has to pay Dan for the benefit Dan brought him (which might be a different amount than what Dan promised Naftali). Zevulun does not have a direct obligation to pay Naftali, even though Naftali did the work in his field. It is true that if Dan runs away without paying Naftali, Zevulun will have to pay Naftali for the benefit he received, but that is because there is no reason for Zevulun to benefit without paying while Naftali remains uncompensated. In contrast, in your case – while there are some similarities between you and Zevulun (as you received the oil) – you already paid for the benefit you received. Therefore, Levi would have to go after Shimon, who promised him payment.
We cannot give a ruling without hearing both sides, but we will make a suggestion. Only according to possibility #1 would you be halachically obligated to pay Levi. Because you might not be able to determine which of the models applies to your case, and because it seems like the proper thing to do, we recommend that you offer Levi that if the money is not recovered, you will pay him a sizable minority of the money he has lost. If the two of you do not agree to an amount, you will have to go to a suitable form of dispute resolution.