Opposition grows to American 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 allows Russian crude oil that has been refined in other countries to be shipped to the United States.

The Biden administration issued a ban in March 2022 on purchasing crude oil and other petroleum products directly from Russia, immediately after the Kremlin’s invasion of Ukraine. The European Union, which was heavily dependent on Russia for supplies of energy, banned Russian crude in December and petroleum products the following February.

But the United States and the European Union continue to purchase Russian oil that has been refined in other countries into gasoline, fuel oil and other products. Countries such as Turkey, the United Arab Emirates, Singapore, China and particularly India are snapping up Russian oil, which must now be sold at a reduced price under a cap 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 legally ceases to be Russian. The same standards have long applied to oil from other sanctioned nations, like Iran and Venezuela.

Still, opposition to this sort of trade is growing.

Oleg Ustenko, an economic adviser to the Ukrainian president, said that such U.S. purchases meant “that we are indirectly supporting this insurrection, which is just not acceptable.”

“I don’t know how it sounds in English, but in Ukrainian, I’m calling this strategy as a cockroach strategy, meaning they are trying to find all possible loopholes, as a cockroach trying to crawl through these holes into your apartment,” he said of Russia’s oil trade. “And what you need to do, you need to close all these holes.”

It’s difficult to estimate just how much refined petroleum the United States is importing that originally came from Russia. But a report released Thursday by Global Witness, a Londonbased organization that advocates environmental and human rights, suggested that the volume was small, but not insignificant.

Take India, one of the biggest participants in this activity. The United States imported roughly 152 million barrels of refined petroleum products in the first five months of this year, with about 8% of that coming from India.

More than 80% of refined oil that the United States imports from India came from a single port: Sikka, in Gujarat province, which is home to the Jamnagar Refinery, the world’s largest refinery, according to calculations by Global Witness. And in the first five months of the year, the group estimated, 35% of the crude oil arriving at the port was of Russian origin.

To block these f lows, Global Witness proposes banning all imports from refineries that purchase Russian crude oil. The group sent members to Washington last week to lobby members of Congress on the move, including in the committees overseeing energy and support for Ukraine.

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

Ustenko and Stanley said such a ban was unlikely to have much impact on U. S. gas prices. But Tom Kloza, global head of energy analysis at the Oil Price Information Service, which tracks wholesale and retail prices of oil, said he believed it would have some effect.

“If you remove a number of countries as potential sources for gasoline and diesel, there’s an impact in the U. S. and an impact in Europe,” he said.

Kloza said that the Biden administration might be reluctant to take any step that would raise gas prices with an election approaching — and that such a ban could also prove difficult to police. He pointed to the example of Saudi Arabia, which last year had started importing Russian diesel while also exporting more diesel from Saudi refineries to other countries.

“There’s lots of ways to get around the Russian boycott,” he said.