Russian exports to nations like China, India, and Turkey enable it to get through the European Union’s embargo on its oil goods. The major consumers of these ‘laundered’ goods are Belgium and the Netherlands. These nations export to the European market.
European oil industry sanctions have attempted to starve Russia’s economy of significant export revenue from fossil fuels. Crude oil imports by ship from Russia have been prohibited since December. A February restriction on products made from processed oil strengthened this.
Re-labeled Russian oil
A price ceiling on Russian oil has also been agreed upon by allies such as the US, Canada, the UK, and the EU. Depending on the gasoline grade, the price per barrel is set between $45 and $100.
The demand for low-cost oil products has not appreciably decreased despite these bans. Many European countries are now making purchases from new suppliers while wilfully ignoring the fact that many of these goods are still largely made in Russia.
According to research by the Finnish Centre for Research on Energy and Clean Air (CREA), imports from countries that did not agree to the price cap have surged in the EU Member States and other countries. Supplies, in particular, have increased dramatically from China, India, Turkey, the UAE, and Singapore.
In comparison to December 2021, imports from these five nations increased by more than double. The countries that had agreed to the price cap bought significantly more oil from these countries in January and February 2023 (51% in January and 28% in February). These 13 million tonnes of oil-related products are equivalent to almost €9.5 billion.
Even though they are legal, these imports violate economic sanctions against Russia and have made these five non-signatory nations some of the major consumers of Russian oil, often at substantial discounts. Together, they now represent up to 70% of all Russian oil imports, compared to a negligible amount before the war.
LNG from “China”
Last winter, several European countries purchased significant amounts of “Chinese” LNG. In reality, China essentially purchased Russian pipeline gas at a reduced price and then marked it up significantly to sell as LNG.
In the year that followed the beginning of Russia’s invasion of Ukraine, the EU purchased just over 20 million tonnes of oil-related items. The biggest consumers of goods from these sanction-free nations are Belgium and the Netherlands.
In the year following the invasion, more than 7 million tonnes of oil products from the five countries arrived in the port of Antwerp. After the embargo and price cap were implemented, a third of this was imported. Refineries in Belgium have previously claimed that their “flexibility” will shield them from any major issues brought on by the ban.
China is using the situation for extra profits
Russian energy giant Gazprom is aiming to increase supplies to Asian markets, particularly China, as gas exports to Europe have dropped sharply due to sanctions over the Ukraine war. Last year, Gazprom supplied 10.4 billion cubic meters of natural gas to China via the Power of Siberia 1 pipeline, which has an annual capacity of 38 billion cubic meters.
As prices have risen, smaller enterprises have turned to Russian Arctic oil grades, Iranian oil, and Venezuelan oil as a result of the resurgence of large processing companies.
Russia will increase its pipeline gas supplies to China by “almost 50%” this year, according to Deputy Prime Minister Alexander Novak.Data suggests that significant Chinese refineries have rekindled their interest in importing Russian oil, causing smaller independent refineries to explore elsewhere.
