UK's refinery loophole: How Russian crude oil fuelling British jets undermines Ukraine sanctions

This existing loophole involves refining Russian crude oil in third-party countries, especially India, and subsequently selling the resulting products to the UK. As highlighted by the BBC, this practice is not illegal under the UK's current ban on importing Russian oil. However, it does undermine sanctions designed to restrict Russian war funding.

The UK government strongly denies that oil imports have occurred from Russia since 2022. However, as a government spokesperson clarified, internationally recognised "rules of origin" mean that, after refinement in another country, crude oil is considered, for trade purposes, as coming from the country of refinement.

The BBC has gained access to two independent reports, which suggest UK import laws on refining enable the import of products made from Russian crude oil.

The Centre for Research on Energy and Clean Air (CREA) highlighted that this "refinery loophole" allows countries such as India and China, which have not imposed sanctions on Russia, to legally import and refine Russian crude oil. Such countries can then export petroleum products, like jet fuel and diesel oil, to the UK and EU.

This loophole boosts demand for Russian crude oil, leading to increased volumes of sales and prices. This, in turn, augments the funds going into the Kremlin's war chest - Isaac Levi, Head of European and Russian Policy and Energy Analysis at CREA, explained this in an interview with BBC.

Data shared with the BBC by CREA indicates that, in the 12 months since the ban on importing Russian crude oil starting from December 2022, petroleum products made from Russian oil valued at approximately £569 million were imported into the UK.

According to another report by the Global Witness group, approximately 5.2 million barrels of refined petroleum products made from Russian crude oil were brought into the UK in 2023. The most significant chunk of these imports - 4.6 million barrels - was aviation fuel, which, according to researchers from the group, was used in one out of every 20 UK flights.

Lela Stanley, who leads the Ukraine team campaign at Global Witness, argues that while the "UK government condemns the war in Ukraine, it is indirectly condoning the sale of Russian crude oil by keeping the refinery loophole open."

Every pound spent on Russian oil is effectively funding Putin's brutal war - Stanley emphasised.

Both reports cite that the existing loophole indirectly ensured that the Kremlin gained over £100 million in tax revenues. The majority of the imported petroleum products are traced back to three Indian crude oil refineries - Jamnagar, Vadinar, and New Mangalore, with the rest sourced from nine other refineries located in various countries, including China.

Data from the International Energy Agency shows that India's import of Russian crude oil has surged since Russia invaded Ukraine. In response to the sanctions, Russia reduced oil prices to lure new buyers. This data further shows that following the invasion, the UK's import of Indian aviation fuel and diesel oil has been on the rise.