Context:  A new report by the Center for Research on Energy and Clean Air (CREA) has found that European countries that banned Russian oil imports are instead importing huge amounts of oil commodities from India, China, United Arab Emirates, Singapore and Turkey, therefore qualifying them as laundromats. 

Key Highlights of the Report

• European Countries that imposed crude oil sanctions on Russia oil are using India, others as ‘laundromats’ for refined products.

• The report accused Indian sellers and European buyers of possibly “circumventing sanctions” by selling crude products from a refinery in Gujarat that is co-owned by Russian oil company Rosneft.

• The report, titled Laundromat: How the price cap coalition whitewashes Russian Oil in third countries, reveals that Western countries bought $42 billion worth of laundered Russian crude in the form of various oil products from nations that are friendly towards Russia, with India leading the five other countries. 

• For instance, India’s diesel exports tripled to ~1,600,000 barrels per day in March 2023, compared to a year ago, making diesel one of the largest components of India-EU trade.

• India has particularly been offering a back door for imports of Russian oil into Britain, blunting the country’s efforts to restrict funding for the Kremlin. 

The CREA report said the most oil products were being exported from two ports in Gujarat

• the Sikka port that services the Reliance-owned Jamnagar refinery

• the Vadinar port that ships oil products

What are ‘Laundromat’ Countries?

• The so-called “laundromat” countries are countries that buy Russian oil and sell processed products to European countries, thus sidestepping European sanctions against Russian Oil.

• The five countries (India, China, Turkey, UAE and Singapore) are identified as ‘laundromats’ for Western countries by the Centre for Research on Energy and Clean Air (CREA).

• The five countries are responsible for 70 percent of Russia's crude oil exports, the study highlighted.

Process of Circumventing sanctions (White-washing of Russian Oil)

• European countries are simply substituting oil products they previously bought directly from Russia, with the same products now “whitewashed” in third countries and bought from them at a premium.

Price Cap Coalition

• A coalition of G7 countries, the European Union and Australia have agreed to prohibit the import of crude oil and petroleum products of Russian origin, supported by a broad range of companies involved in the transport of oil.

• The G7 Oil Price Cap for crude oil of US$60 per barrel came into effect 5 December 2022

• India’s stand is to remain non-committal on any such pricing cap arrangement.