A newly published report by the Center for the Study of Democracy (CSD) and the Center for Energy and Clean Air (CREA) has shed light on the continuing trade of Russian oil products through Turkey, despite Western sanctions aimed at curbing Russia’s oil revenues.
According to the report, Western nations, including Bulgaria, the European Union, and the United States, purchased approximately $2 billion worth of oil products refined from Russian crude oil in Turkey during the first half of 2024.
This trade takes advantage of a loophole in current sanctions, allowing Russian crude to be legally refined in third countries like Turkey before entering Western markets.
Once the oil is processed in another country, it is no longer classified as Russian, making it technically permissible under existing regulations.
This flow of Russian-origin oil highlights the complex challenges of enforcing sanctions while maintaining energy supplies in Europe and beyond.
Russia’s Oil Revenues and the Impact of Sanctions
The report underscores the importance of oil revenues to the Russian economy. In 2023, oil and gas accounted for 32% of Russia’s federal budget, making the sector a critical source of funding for the Kremlin, especially in the context of the war in Ukraine.
Despite sanctions, Russia continues to profit from oil sales through intermediaries like Turkey, which processes Russian crude into products that are then exported to the EU and the US.
The trade of these refined products, particularly diesel and gasoline, through Turkey undermines Western efforts to cut off Russia’s oil revenue.
By allowing Russian crude to be processed outside its borders, third countries are acting as intermediaries, enabling Russia to maintain access to international markets despite attempts to isolate its oil sector.
Turkish Refineries at the Center of the Trade
According to the CSD and CREA report, three major Turkish refineries have been refining large quantities of Russian crude oil during the first six months of 2024.
One of the key examples is the ‘Star’ refinery in Turkey, which is owned by Azerbaijan’s state oil company, SOCAR. The report reveals that nearly 100% of the oil processed at the Star refinery originates from Russia, much of it supplied by Russian oil giant Lukoil.
This refined oil, in turn, is exported to various markets, including European countries like Bulgaria, as well as the United States.
Lukoil’s presence in Bulgaria is also flagged in the report, as the company has a significant influence on the country’s oil sector, raising concerns about the flow of Russian oil products into the Bulgarian and broader European markets.
Critics have pointed out that this arrangement not only provides Russia with a financial lifeline but also compromises the integrity of the sanctions regime imposed by Western nations.
While the refining of Russian crude in Turkey may be technically legal under current sanctions, the report highlights the ethical and political challenges posed by the continuation of this trade.
Recommendations to Strengthen Sanctions
In response to these findings, the CSD and CREA have called for stricter measures to close this loophole. One of the key recommendations made by the report is for sanctioning countries to prohibit the import of petroleum products from refineries that process Russian crude oil.
This step, the report argues, would help to tighten sanctions and prevent third countries from profiting from acting as intermediaries for Russian oil.
The report also notes that while this trade is highly profitable for oil companies and traders, the benefits are not passed on to consumers in the form of lower prices.
Instead, the profits from the sale of these refined products contribute directly to Russia’s war effort, with the report estimating that the tax revenues collected by Russia from these transactions could potentially fund the recruitment of thousands of additional soldiers for the conflict in Ukraine.
Bulgaria’s Role and Political Silence
The report criticizes the political silence in Bulgaria regarding the dominance of Lukoil in the country’s oil market.
Despite the expiration of a derogation that previously allowed Bulgaria to continue importing Russian oil, the report suggests that Bulgarian politicians have been reluctant to address Lukoil’s influence or take stronger action to prevent the flow of Russian oil products into the country.
Bulgaria’s reliance on Lukoil’s Burgas refinery, which processes significant amounts of Russian crude, remains a point of concern for the authors of the report.
It is suggested that some of the oil processed in Bulgaria may have been diverted to Turkey and then exported back to European and US markets, further complicating the enforcement of sanctions.
A Global Challenge
The findings of this report highlight the complexities of enforcing sanctions in a globalized oil market, where oil can be easily refined in one country and exported to another.
The ongoing trade of Russian-origin oil through Turkey reveals the limits of the current sanctions regime and underscores the need for a more coordinated international effort to close these loopholes.
As Western nations continue to support Ukraine in its defense against Russian aggression, the report calls for stricter enforcement of sanctions and increased vigilance to prevent third countries from acting as intermediaries for Russian oil.
Whether the EU, the US, and other Western allies will heed these recommendations remains to be seen, but the challenge of curbing Russia’s oil revenues while maintaining energy security will continue to be a key issue in the months ahead.
This article was created using automation technology and was thoroughly edited and fact-checked by one of our editorial staff members