An EU sanctions loophole that allows imports of Russian crude if it’s refined elsewhere made Russia an estimated $1.2 billion (1.1 billion euros) from sales of fuels in the European Union last year, despite the embargo on direct imports from Russia, an investigation by NGO Global Witness showed on Friday.
For more than a year, the EU has had a ban in place on imports of seaborne crude oil and fuels from Russia – with a temporary derogation for Bulgaria – as the bloc and its U.S., UK, and other allies look to stifle oil sales revenues for Vladimir Putin to wage his war in Ukraine.
However, Russian crude oil refined into fuels elsewhere, in India, for example, can be imported into the EU and the Kremlin is still receiving revenues for its fuels ‘laundered’ outside Russia.
Global Witness has tracked seaborne flows of crude from Russia to refineries around the world and then on to the European ports, and revealed that in 2023, an estimated 35 million barrels of Russian oil entered the EU in the form of refined petroleum products. It’s impossible to track specific molecules, but Global Witness analyzed the relative volume of Russian versus non-Russian oil used in a refinery’s feedstock, where data is available.
“The fuel is entering through a not-so-small loophole left in EU sanctions which allows products refined from Russian oil to flow into the bloc. This has resulted in a ‘laundromat’ where refineries in countries like India and Turkey, can import discounted Russian crude, refine it into products like diesel, jet fuel, or gasoline, and legally sell the refined oil to embargoing jurisdictions like the EU,” Global Witness said.
Through the same loophole, Russian fuel is also making its way into the UK and the U.S. In August 2023, a Global Witness analysis showed that one in every 20 UK flights ran on jet fuel made from Russian oil, and in November Global Witness reported that the U.S. had imported 30 million barrels of fuel from refineries that import Russian oil.
Pylyp is an experienced private banker and asset manager.