Opposition is growing against US imports of refined Russian oil
Ukrainian officials and human rights groups are asking the United States to close what they describe as a loophole that would allow Russian crude refined in other countries to be shipped to the United States.
The Biden administration issued a ban last March on the purchase of crude oil and other petroleum products directly from Russia immediately after the Kremlin’s invasion of Ukraine. The European Union, which relied heavily on Russia for energy supplies, banned Russian crude oil in December and petroleum products in the following February.
But both the United States and the European Union continue to buy Russian oil that has been refined into gasoline, fuel oil and other products in other countries. Countries such as Turkey, the United Arab Emirates, Singapore, China and especially India are picking up Russian oil, which must now be sold at a reduced price under a ceiling imposed by the United States and Europe. These nations – which have been described as “laundromat” countries by environmental and human rights groups — then refine the oil and send it to other markets.
This activity is legal: once Russian crude oil has been “substantially transformed” by being refined in another country, it ceases to be legal Russian. The same standards have long applied to oil from other sanctioned countries, such as Iran and Venezuela.
Still, resistance to this kind of trade grows.
Oleg Ustenko, an economic adviser to the Ukrainian president, said such US purchases meant “we are indirectly supporting this insurgency, which is simply not acceptable.”
“I don’t know how it sounds in English, but in Ukrainian I call this strategy a cockroach strategy, which means they try to find all possible loopholes, like a cockroach trying to crawl into your apartment through these holes, he said of the Russian oil trade. “And what you have to do, you have to plug all these holes.”
It is difficult to estimate how much refined petroleum the United States imports that originally came from Russia. But a report released Thursday by Global Witness, a London-based organization that advocates for environmental and human rights, suggested the volume was small, but not insignificant.
Take India, one of the largest participants in this activity. The United States imported about 152 million barrels of refined petroleum products in the first five months of this year, about 8 percent of which came from India.
According to calculations by Global Witness, more than 80 percent of the refined oil the United States imported from India came from a single port: Sikka, in Gujarat province, which is home to the Jamnagar Refinery, the world’s largest refinery. And in the first five months of the year, the group estimated, 35 percent of crude arriving at the port was of Russian origin.
To block these flows, Global Witness proposes banning all imports from refineries that buy Russian crude oil. The group sent members to Washington last week to lobby members of Congress along the way, including on the committees that oversee energy and support for Ukraine.
“Banning oil from refineries that run on crude oil from Russia is a wise decision by the US,” said Lela Stanley, senior researcher at Global Witness.
Mr Ustenko and Ms Stanley said such a ban is unlikely to have much impact on US gas prices. But Tom Kloza, global head of energy analysis at the Oil Price Information Service, which tracks oil wholesale and retail prices, said he believed it would have some effect.
“If you take out some countries as potential sources for gasoline and diesel, it has an impact in the US and an impact in Europe,” he said.
Mr Kloza said the Biden administration might be reluctant to take any move that would raise gas prices with an election approaching – and that such a ban could also prove difficult for police. He pointed to the example of Saudi Arabia, which started importing Russian diesel last year while also exporting more diesel from Saudi refineries to other countries.
“There are many ways to get around the Russian boycott,” he said.
It also remains to be seen what such a ban would mean for the US relationship with India, which the Biden administration views as an important strategic partner. The Jamnagar Refinery is owned by Reliance Industry, which in turn is controlled by Indian businessmen Mukesh Ambani. Mr Ambani is a close associate of Indian Prime Minister Narendra Modi and was a guest at the state dinner hosted by the White House for Mr Modi last week.