Diesel, kerosene and other fuels refined from Russian oil have poured into Europe, prompting Kyiv to call for tougher sanctions against Moscow.
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In an interview with POLITICO, Oleg Ustenko, economic adviser to Ukrainian President Volodymyr Zelensky, called on the EU, as well as the United Kingdom and the United States, to close the “loophole” allowing third countries such as India, China and Turkey to process oil products and crude oil purchased from Moscow’s state-owned energy companies. companies, gasoline, diesel and other products before selling them without restrictions.
In December, the G7 agreed to set a ceiling price for Russian oil at $60. per barrel, that is, sales below this price are allowed. The idea was to squeeze Moscow financially while allowing the oil markets to continue to function.
The result has been countries like India buying up cheap Russian crude and then refining it, which gives local companies a refining margin, and then selling it to other countries.
Indian imports of Russian crude oil peaked at 69 million barrels in May, almost ten times more than in the same period in 2021 before Russia’s invasion of Ukraine — and more than double the 31 million it bought last May.
Volumes have since fallen to about 50 million barrels in July, but remain well above pre-war levels.
As a result, Indian exports of fuel products to the EU have skyrocketed. In June, it exported 5.1 million barrels of diesel fuel and 3.2 million barrels of aviation fuel to the block, compared to only 1.68 million barrels and 0.51 million barrels, respectively, in June 2021.
Ustenko singled out India, given that “before the invasion, it bought Russian oil, but the level of imports was very small, only about 1% of imported oil. Now it is almost 40%, which is really a dramatic change.”
For New Delhi, this is just great business.
In an interview with CNBC last week, India’s Oil and Natural Gas Minister Hardeep Singh Puri admitted that his country’s private refineries are buying up Russian oil at well below market rates.
If there is a 30% discount, then the Russians tie it with a bow and send it to us for free. That’s what it means.
It also negatively affects Russia’s income.
Russia’s energy export revenues have almost halved in the first six months of this year, while the ruble hit a historic low in recent weeks as sanctions began to undermine the foundations of the Russian economy.
But as the war takes its toll on Ukraine, Kyiv wants to tighten the screws even more.
Politicians should support “a ban on all oil products entering the G7 countries if they were produced using Russian oil, even if they were processed elsewhere,” Ustenko said.
Ustenko added that Kyiv wants to enlist support among the G7 countries to lower the price limit to just $30. per barrel. Poland and the Baltic states pressed for price cuts last year, but countries such as Greece, whose oil tankers carry much of Russia’s crude oil, have refused.
The moves, Ustenko said, “would be a huge signal to producers that it is now absolutely illegal to touch Russian oil and supply the regime with blood money that they use to buy weapons and commit war crimes in Ukraine.”
However, this idea is unlikely to find much support, at least.
According to Maximilian Hess, a fellow at the Institute for Foreign Policy Studies and the author of a new book on sanctions against Russia, the refining of Russian oil by third countries is not so much a failure of the measures as an intended feature.
Part of the West’s strategy, the US has repeatedly said, is to secure the flow of Russian oil, ensuring that Moscow earns less from its exports and does not receive premiums from the sale of refined fuels rather than crude oil. Among some members of the G7, there is certainly an appetite for a price cap of $30, but there may be some problems with the introduction of a ban on refined fuels, Hess added.
Source: Racurs
I am David Wyatt, a professional writer and journalist for Buna Times. I specialize in the world section of news coverage, where I bring to light stories and issues that affect us globally. As a graduate of Journalism, I have always had the passion to spread knowledge through writing.