A new report by the Center for Research on Energy and Clean Air (CREA) has found that European countries that banned Russian oil imports are instead importing huge amounts of oil commodities from India, China, United Arab Emirates, Singapore and Turkey, therefore qualifying them as laundromats.
The report, titled Laundromat: How the price cap coalition whitewashes Russian oil in third countries, reveals that western countries bought $42 billion worth of laundered Russian crude in the form of various oil products from nations that are friendly towards Russia, with India leading the five other countries. For instance, India’s diesel exports tripled to ~1,600,000 barrels per day in March 2023, compared to a year ago, making diesel one of the largest components of India-EU trade.
“Price cap coalition countries have increased imports of refined oil products from countries that have become the largest importers of Russian crude. This is a major loophole that can undermine the impact of the sanctions on Russia,” said the report.
According to the CREA report, most oil products were exported from two ports in Gujarat, alleging that this could constitute “circumventing sanctions” imposed unilaterally by the U.S. and Europe. India has particularly been offering a back-door for imports of Russian oil into Britain, blunting the country’s efforts to restrict funding for the Kremlin. Some British buyers have effectively replaced imports directly from Russia with imports from Russian-fed refineries, thereby indirectly supporting the Russian oil industry.
Although such a supply chain is actually legal under UK rules, still it cannot be overlooked because this is another covert way to fund Putin’s war. Before the war began nearly a year ago, it was pretty rare for Indian refiners to process Russian crude. The refiners have always exported to Europe, but they are now exporting even more because it’s more attractive as Europe’s diesel prices are higher and also buying more Russian crude because Russia is offering heavy discounts.
Indeed, Oleg Ustenko, adviser to Ukraine’s president Volodymyr Zelensky, says these companies are “exploiting weaknesses in the sanctions regime”.
“The UK must close the loopholes that undermine support for Ukraine by allowing bloody fossil fuels to continue flowing across our borders. About one in five barrels of the crude oil that they process is Russian. A big chunk of that diesel they produce now will be based on Russian crude oil,’’ he has said.
Kpler data has revealed that the Jamnagar refinery on India’s west coast imported 215 shipments of crude oil and fuel oil from Russia during 2022, 4 times as much as it bought in the previous year. Meanwhile, the UK has imported a total of 10m barrels of diesel and other refined products from Jamnagar since the war began, 2.5 times what it bought during 2021 with Trafigura, Shell Plc (NYSE: SHEL), BP Plc (NYSE: BP), PetroChina Co. (OTCPK: PCYYF) and Indian multinational conglomerate Essar Group the key buyers.
By Alex Kimani for Oilprice.com
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Moreover, it isn’t only India that is using this practice but also China, UAE, Singapore and Turkey all of which are continuing to ignore Western sanctions.
What could Western countries do? Nothing. They are no longer the rulers of the world. A New World Order and a also a new global financial system are already emerging.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert