US and EU Continue to Purchase Russian Oil Through a Legal Loophole

Continued Purchase of Refined Russian Oil

Despite the bans, both the United States and the European Union are still acquiring Russian oil that has undergone refining in other countries, resulting in products such as gasoline and fuel oil. Countries such as Turkey, the United Arab Emirates, Singapore, China, and particularly India have been actively purchasing Russian oil. This comes with a reduced pricing requirement, imposed by the United States and Europe.

It is important to note that this activity is legally permitted. Once Russian crude oil has been substantially transformed through refining in another country, it is no longer considered Russian. Similar standards have been applied to oil from other sanctioned nations, including Iran and Venezuela.

Efforts to Curb Imports

Global Witness, an organization advocating for environmental and human rights based in London, released a report suggesting that while the overall volume is relatively small, it remains significant. The United States imported around 152 million barrels of refined petroleum products in the first five months of this year, with approximately 8 percent coming from India.

The report further highlights that over 80 percent of the refined oil imported by the United States from India originated from a single port in Gujarat province called Sikka. This port is home to the Jamnagar Refinery, which happens to be the largest refinery globally. Global Witness estimates that 35 percent of the crude oil received at this port originated from Russia.

To address and prevent these flows, Global Witness proposes a ban on all imports from refineries that acquire Russian crude oil. The organization recently sent members to Washington, D.C. to advocate for this move and engage with members of Congress, particularly those involved in energy and support for Ukraine.

Lela Stanley, a senior investigator at Global Witness, stated, “Banning oil from refineries running on Russian crude is a common-sense decision for the U.S.”

However, Tom Kloza, the global head of energy analysis at the Oil Price Information Service, holds a different perspective. He believes that such a ban would have an impact, as it would reduce the potential sources for gasoline and diesel in the United States and Europe. He mentioned the example of Saudi Arabia, which started importing Russian diesel last year while simultaneously exporting more diesel produced by Saudi refineries to other countries.

Kloza added, “There are numerous ways to circumvent the Russian boycott.”

The repercussions of such a ban on the United States’ relationship with India, a country regarded as a key strategic partner by the Biden administration, remain to be seen.