by China, India, Singapore, Turkey and the United Arab Emirates lend a ‘hands-on’ to Russia to avoid Western oil sanctions
Western nations have taken significant steps to cut energy ties with Russia, cracking down on imports of seaborne crude oil and refined petroleum products, imposing a $60 price cap on sales to non-Western countries, in the purpose of limiting its ability to fund the Kremlin. war in Ukraine.
But five countries increased their imports of Russian oil following the invasion of Ukraine and refined it into products that they sell to countries that imposed sanctions on Russian oil, according to a report published by the Center for Energy and Clean Air Research (CREA).
‘Wash Them’ Company Undermines Russia’s Oil Price Cap, Fuels Invasion
The CREA identifies China, India, the United Arab Emirates, Turkey and Singapore as “washing countries”, which increased imports of Russian oil after the invasion of Ukraine.
They have also increased exports of refined products to “price cap countries” that have sanctioned Russian oil, including the European Union, Australia, Japan, the United Kingdom, Canada and the United States. .
The EU oil price ban and cap, imposed in December and February respectively, cost Moscow around 160 million euros ($175.3 million) a day, but were carefully designed to allow Russian oil to flow to world markets in order to keep prices low and avoid supply. disturbances.
CREA report shows that maritime imports of Russian crude oil to China, India, Turkey, United Arab Emirates and Singapore increased by 140% in volume, or 182% in value compared to the previous year , since the outbreak of war in Ukraine. .
The total value of their imports was 74.8 billion euros ($82 billion) over the 12 months, with the five countries accounting for 70% of Russia’s crude oil exports since the start of the war.
Since the invasion, the EU, G7 and Australia have increased the volume of refined petroleum products imported from China by 94%, India by 2%, Turkey by 43%, the United Arab Emirates by 23% and Singapore by 33%. Exports of petroleum products from the five countries increased by 80% in value and 26% in volume to countries with price caps, according to the report, with only a 2% increase in volume to countries without price caps. since February 2022.
CREA said it was unable to verify the exact amount of petroleum products from Russian crude passing through the five “laundry” countries to countries that adhere to the price cap, although it reported trends in the data. as “proof that the laundry countries provide funds to the Kremlin through higher imports of Russian crude compared to the previous year“.
“One of the ways Russia has been able to create an opaque market is by sending tankers without a specific destination. This is how they finally arrive at ship-to-ship transfers», States reputable media.
An example is Singapore’s refining industry, which is one of the largest in the world with a combined processing capacity of over 1.5 million bpd and plays an important role in the global oil market.
The hypocrisy of state sanctions
To understand the hypocrisy, Singapore publicly criticized Russia’s invasion of Ukraine, imposing targeted sanctions and restrictions on Russia, covering export controls on military goods and certain dual-use goods, as well as measures prohibiting financial institutions from doing business with designated Russian banks. However, the island nation has not banned the import of Russian oil or petroleum products!
In addition to diesel imports from Russia reaching their highest volume in more than a year, official data showed that imports of Russian naphtha from Singapore, which is used in gasoline blending and also an ingredient key in plastics and petrochemicals, they almost tripled in the first quarter of 2023 to reach 741,000 tons, compared to around 261,000 tons in the fourth quarter of last year.
Under the price cap system, companies shipping Russian oil outside Europe can only access EU insurance and brokerage services if they sell the oil for $60 or less.
According to the CREA report, 56% of Russian crude oil shipped to the five “laundry” countries was transported by vessels owned or insured by price cap countries from December 2022 to February 2023.
The Helsinki-based research body suggests that countries with price caps use their leverage in the insurance and shipping sectors to ban imports from refineries that receive Russian crude, deny imports of refined products of Russian origin and permanently ban maritime services on vessels used to transport Russian crude without respecting the price cap.
“The penalty for violating the price cap policy is a ban on insurance and financial services for three months. This amounts to a “soft touch” compared to the original proposal, which was to be banned in perpetuity. The punishment must clearly be made more severe», said Levi, an energy analyst at CREA, who said he doesn’t know of any company that has yet “caught in the net for violation of sanctions“.
Finally, Russia has banned agreements involving the application of the price cap mechanism, and its partners are now investing in vessels, flagged, registered and insured, in jurisdictions beyond the reach of the EU and the G7 to avoid the maximum price restrictions.
