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Opposition Grows to U.S. Imports of ‘Laundered’ Russian Oil

Ukrainian officials and human rights groups have called on the United States to close the loophole, allegedly allowing Russian oil refined elsewhere to be shipped to the United States.

The Biden administration banned direct purchases of crude oil and other petroleum products from Russia in March last year, shortly after the Kremlin invaded Ukraine. The European Union, which relied heavily on Russia for its energy supply, banned Russian crude oil in December and petroleum products in February the following year.

But both the United States and the European Union continue to buy Russian crude that has been refined in other countries into products such as gasoline and fuel oil. Countries such as Turkey, the United Arab Emirates, Singapore, China and especially India are hoarding Russian crude, which must now be sold at reduced prices under caps imposed by the US and Europe. These countries are described as follows. The country of the “coin laundry” The oil is refined by environmental and human rights groups and sent to other markets.

This activity is legal. When Russian crude oil is “substantially altered” by being refined in another country, it is no longer legally Russian. The same standards have long been applied to the oil of other sanctioned countries such as Iran and Venezuela.

not yet, oppose this kind of trade Growing up.

Oleg Ustenko, an economic adviser to the Ukrainian president, said such purchases by the United States “mean that we are indirectly supporting this rebellion and are in no way acceptable.”

“I don’t know how it sounds in English, but in Ukrainian we call this strategy the Cockroach Strategy. I mean we’re trying to find out,” he said of Russia’s oil trade. “And all you have to do is plug all these holes.”

It is difficult to estimate how much refined oil the United States imports originally from Russia.but report released Thursday Global Witness, a London-based group that advocates for the environment and human rights, suggested the amount was small but not significant.

Take for example 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% of which came from India.

Global Witness calculates that more than 80% of the refined oil imported by the United States from India comes from a single port, Sikka, Gujarat, home to the world’s largest refinery, the Jamnagar refinery. And in the first five months of the year, the group estimated that 35 percent of the oil arriving at ports came from Russia.

To stem this flow, Global Witness is proposing a ban on all imports from refineries that buy Russian crude. The group sent members to Washington last week to lobby members of Congress, including the committees overseeing energy and aid to Ukraine, about the move.

“Banning oil from refineries that use Russian crude is a common-sense decision for the United States,” said Lera Stanley, senior researcher at Global Witness.

Ustenko and Stanley said such a ban is unlikely to have a significant impact on U.S. gasoline prices. But Tom Croza, global head of energy analysis at the Oil Price Information Service, which tracks wholesale and retail oil prices, said he believes there is some effect.

“Excluding many countries as potential sources of gasoline and diesel would have implications for the United States and Europe,” he said.

Cloza said the Biden administration could be reluctant to take any action to raise gasoline prices as the election approaches, and such a ban could also be difficult for police. He pointed to the example of Saudi Arabia starting to import Russian diesel last year while also increasing exports of diesel from Saudi refineries to other countries.

“There are many ways to avoid a boycott of Russia,” he said.

It remains to be seen what these bans will mean for relations between India and the United States, which the Biden administration sees as key strategic partners. The Jamnagar refinery is owned by Reliance Industries, which is run by Indian businessman Mukesh Ambani. Ambani is a close partner of Indian Prime Minister Narendra Modi and was a guest at a state dinner hosted by the White House for Modi last week.

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