putin russia
Russian President Vladimir Putin.Sergei Karpukh/Reuters
  • China, India, and others have ramped up imports of Russian oil and are selling it to the West, a new study found.
  • Analysts at CREA said the "laundromat" operation undermines the price cap and sanctions on Moscow.
  • "This process provides funds to Putin's war chest," the report said.

Western nations that banned Russian oil have together imported nearly $46 billion worth of oil products from countries that have dramatically ramped up purchases from Moscow, according to a study published Wednesday from the Centre for Research on Energy and Clean Air.

China, India, Turkey, UAE, and Singapore have boosted Russian oil imports over the last year and increased exports of refined products to the European Union, Australia, and most of the Group of Seven, CREA researchers wrote, calling it a "major loophole" that undermines the impact of sanctions on Russia.

In December, the EU banned seaborne imports of Russian crude and joined the G-7 in imposing a price cap of $60 per barrel. CREA found that the price-cap coalition's imports of refined oil products from the five countries rose by more than 10 million tons in the year since Russia's invasion compared to the prior year.

"We call these five countries that have increased purchases of Russian oil and 'launder' it into products shipped to countries having sanctioned Russian oil the 'laundromat' countries," the study said.

Russian oil flows
Centre for Research on Energy and Clean Air

The CREA figures show that the EU has been the biggest importer of Russian refined products, with Australia next. The highest proportions of imported oil products were diesel (29%), jet fuel (23%) and gasoil (13%).

The study also found that 56% of Russian crude oil shipped to laundromat countries have been transported by vessels owned or insured by the price-cap countries in the period December 2022 up to February 2023. The figure climbs to 74% for oil products exported from laundromat countries in the same period.

In effect, the countries that have agreed to sanction Russia are the ones who have become the largest importers of Russian crude, per CREA.

"This is currently a legal way of exporting oil products to countries that are imposing sanctions on Russia as the product origin has been changed," the authors of the study said. "This process provides funds to Putin's war chest."

Separate Kpler data shows that Russia now exports more oil than it did before its invasion of Ukraine after redirecting most of its shipments from Europe to Asia.

But sales come at a steep discount amid sanctions, and Russia's revenues remain lower than the same time last year, according to the International Energy Agency.

Read the original article on Business Insider