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India has become the largest exporter of oil products to the EU, as well as the second-largest importer of Russian crude, which researchers attribute to a loophole in the bloc’s sanctions programme. 

Western sanctions generally prohibit direct imports of Russian crude and oil products, but place no restrictions on purchases of petroleum products from non-sanctioned countries, even if they have likely been produced from Russian crude oil. 

The arrangement has been described as a sanctions loophole by campaign groups, but while authorities in the EU and US have considered taking action over the past year, the practice remains permitted. 

According to analysis published this month by the Centre for Research on Energy and Clean Air (CREA), a Finland-headquartered organisation that tracks flows of Russian fossil fuels, the volume of Russian-origin petroleum products imported to Europe via India has grown significantly. 

CREA finds that in the first three quarters of this year, EU imports from three major Indian refineries jumped 58% year-on-year. Those three refineries – Jamnagar, Vadinar and Mangalore – are “increasingly reliant” on Russian crude imports, it adds. 

Prior to Russia’s invasion of Ukraine, Indian refineries imported only a small proportion of crude oil inputs from the country, with the majority coming from the Middle East, Reuters data shows. 

But CREA says that last month, 37% of Russia’s crude oil sales went to India, putting the country second only to China as the largest export destination. Those transactions generated an estimated €2.6bn in export earnings for Russia, it says. 

The findings “further amplify… the fact that EU member states’ continued imports are expanding the refining loophole, and Russian revenues from crude exports to third countries”, the organisation says. 

CREA also highlights several European countries that are continuing to import Russian fuel directly. 

Pipeline gas and LNG imports are generally not subject to the EU’s sanctions regime, while an exemption allows Hungary, Slovakia and the Czech Republic to import Russian crude oil through the Druzhba pipeline. 

CREA’s analysis finds that France imported Russian LNG worth €233mn, a “significantly higher” figure than in 2023. Belgium imported a further €172mn-worth, it says. 

Austria imported pipeline gas worth €220mn, while Slovakia and Hungary imported pipeline oil and gas totalling €210mn and €206mn respectively. 

“Much more should be done to limit Russia’s export earnings and constrict the funding of the Kremlin’s war chest,” the organisation argues. “This includes… banning unsanctioned fossil fuels such as LNG and pipeline fuels that are legally allowed into the EU.” 

Meanwhile, the analysis highlights the growing role of Russia’s so-called shadow fleet, a growing number of ageing tankers used to transport oil and fuel without relying on western service providers. 

Around two-thirds of crude oil and petroleum product exports were shipped on such vessels last month, it finds. 

Following growing warnings that the shadow fleet poses a major environmental risk, particularly where vessels are not covered by P&I Club insurance, the issue is attracting growing attention from European policymakers. 

A European Parliament briefing paper issued last week discusses the possibility of expanding sanctions, tightening shipping controls and enhancing maritime surveillance to curb the practice. These efforts are complex in practice, however. 

Though sanctions programmes have increasingly targeted specific vessels or shipowners, the paper notes that shadow tankers “typically work part-time or occasionally for Russian clients, often serving multiple clients and carrying cargo not under sanctions in addition to Russian oil”.  

“This complicates efforts to track and enforce sanctions, as there is significant overlap with the broader fleet,” it says. “The concept of a distinct shadow fleet dedicated solely to evading sanctions may be overstated.” 

Members are due to vote on a resolution addressing the issue on November 14.