US lawmakers are pushing for a ban on fuel imports from refineries that use Russian crude oil, as researchers suggest such transactions have bolstered Russia’s tax revenue by up to US$275mn so far this year. 

Sanctions already prevent companies from importing Russian crude oil and petroleum to the US, but there is no restriction on importing fuel from other countries even if Russian crude had been used in its production. 

Campaign groups argue this situation is a weakness in the current sanctions regime as it helps maintain demand for Russian oil, driving up prices and helping the country fund its military action in Ukraine. 

A bipartisan bill introduced by US representatives Lloyd Doggett and Joe Wilson last week aims to tackle the issue by prohibiting imports of petroleum products from any refinery that buys crude oil from Russia. 

A statement published by Doggett’s office says the act “would close the ‘refining loophole’ that allows Russian oil to be laundered through third-party countries and sold in the United States as gasoline and other petroleum products”. 

“Russia is selling millions of barrels of oil that are refined through foreign refineries and resold here and in Europe,” Doggett adds.  

The proposed reforms follow research from non-governmental organisation Global Witness that suggests such flows are a significant source of revenue for the Kremlin. 

Based on analysis of oil and petroleum trade flows during the first nine months of this year, Global Witness estimates the US imported 30 million barrels of fuel from refineries that buy oil from Russia. 

It calculates that around 7 million barrels of Russian crude were used to produce that fuel, generating between US$180mn and US$275mn in tax revenue for the Russian state. 

“Laundromat refineries are a vital lifeline for the Kremlin, absorbing the supply of Russian crude that was banned from going to the G7 and EU,” Global Witness says. 

The bill would not be expected to have any direct impact beyond the US, as it applies only to the physical import of oil rather than the use of the US financial system or currency.  

“This question came up in the context of the prohibition on importing Russian crude oil, put in place early on after Russia’s invasion,” a US-based lawyer tells GTR, speaking on condition of anonymity.  

“In that case, [regulators] said if there was no import, then there’s no violation. I expect this would be the same concept.” 

The bill does not address how importers would be expected to check or prove that a refinery has handled Russian oil, and the lawyer adds that industry participants “would probably be looking for more certainty as to what that [requirement] constitutes”. 

Campaigners are already urging lawmakers in the EU and UK to consider taking similar steps, however. Earlier research has uncovered significant increases in Russian oil imports by some refineries – notably in India – that are continuing to sell petroleum products to the UK, EU and Australia. 

Lela Stanley, co-lead of Global Witness’ Stop Russian Oil project, tells GTR: “Russia’s oil revenues are still funding its war on Ukraine, and western nations are still driving demand for that oil. We welcome progress in the US toward closing this sanctions loophole. 

“The UK and EU must follow suit and ban imports from refineries using Russian crude.” 

Svitlana Romanko, founder and director of Ukrainian campaign organisation Razom We Stand, welcomes the bill as “a significant step towards tightening the oil embargo against Russia”.  

“We hope the US will adopt this bill swiftly and, with the broad engagement of the EU, G7, G20 and other powerhouses, will succeed in efforts to close all loopholes to cut Russia’s fossil fuel trade.” 

A European Commission spokesperson told GTR last month that purchasing fuel from refineries that use Russian oil “goes against the aim of our sanctions” and work was underway on potential solutions. 

But GTR understands the issue is not expected to form part of the EU’s 12th package of sanctions on Russia, currently under negotiation. 

The issue was also raised during a debate in the UK’s House of Commons on November 9, with MP Stephen Doughty asking the government whether it has assessed the “very serious allegations” that Russian oil is still reaching the UK market. 

Meanwhile, trading giant Vitol has pushed back against the language used by campaigners when discussing the so-called refinery loophole. 

In a statement issued to Global Witness and published last week, Vitol says: “Sanctions restricting the purchase of Russian products do not prohibit the export of products from Turkish and Indian refineries, and Vitol conducts its business in full compliance with all applicable sanctions. 

“We believe it is misleading to use words such as ‘laundromat’ and ‘laundered’ in this context given the obvious associations of such words with criminal activity.”