Five countries have expanded imports of Russian oil in the wake of the Ukraine invasion and refined it into products they are selling to countries that have sanctioned Russian oil, according to a report released today by the Centre for Research on Energy and Clean Air (CREA).
Their “laundering” operation is undermining the price cap on Russian oil and fueling the invasion, the analysts say.
“This is currently a legal way of exporting oil products to countries that are imposing sanctions on Russia as the product origin has been changed,” according to the report. “This process provides funds to Putinʼs war chest.”
CREA identifies China, India, the United Arab Emirates, Turkey and Singapore as “laundromat countries” that increased imports of Russian oil after the Ukraine invasion. They also increased exports of refined products to the “price-cap countries” that sanctioned Russian oil, including the European Union, Australia, Japan, the United Kingdom, Canada and the United States.
“The EU, G7 and Australia … continue to import Russian fossil fuels as refined oil products from third countries and allow transportation on their vessels and insurance,” said Isaac Levi, Energy Analyst and co-author of the report.
The EU has been the largest importer of these refined products, according to CREA, followed by Australia. And most of the laundered products are traveling on European ships.
Five countries are helping Russian oil evade the cap set by a coalition led by the G7 nations.
CREA
In the year following Russia’s invasion of Ukraine, the five laundering countries increased seaborne imports of Russian crude oil by 140% over the previous year, according to CREA. They are absorbing 70% of Russiaʼs crude oil exports.
Meanwhile, they increased exports of oil products by 26% to price cap-coalition countries. Their exports to non price-cap countries rose only 2%, showing that the price cap-coalition countries drove the increase in oil-product exports from countries importing Russian crude.
“Increasing the imports of oil products from the main importers of Russian crude oil undermines the oil sanctions against Russia,” said Lauri Myllyvirta, lead analyst and co-author of the report. “On the other hand, clamping down on this trade is an opportunity to exert badly needed additional leverage and cut off financing for Russia’s brutal invasion of Ukraine.”
The Russian oil finds its way into the price-cap countries as diesel, jet fuel and gasoil.
The EU spent $19.3 billion on products from the countries sourcing the most Russian crude oil in the 12 months after the invasion of Ukraine, according to CREA, followed by:
- Australia, $8.74 billion
- The United States, $7.21 billion
- The United Kingdom, $5.46 billion
- Japan, $5.24 billion
CREA is an independent research institute registered in Finland, with staff across Europe and Asia. They have published past insights on Germany’s dependence on Russian gas and Europe’s surprising drop in carbon emissions as it learned to live with reduced Russian supply.
