The top economic adviser to the Ukrainian president, Oleg Ustenko, has urged Western countries to tighten their sanctions on Russia. According to Ustenko, the current restrictions allow countries like India, China, and Türkiye to refine crude oil exported by Moscow and sell it on the global market without any restrictions.
In an interview with Politico, Ustenko called on officials in the European Union (EU), the United Kingdom (UK), and the United States (US) to close the “loophole” that is being used to evade sanctions on Russia. He highlighted that Russia’s state energy firms are still able to ship crude oil to nations that have not signed up to Western sanctions. These countries then refine the oil into different fuels, such as petrol, diesel, and kerosene, before selling it on global markets.
Initially, the EU and G7 countries introduced a price cap of $60 per barrel on Russian seaborne oil exports to prevent this situation. However, in response, Russia ceased shipments to countries that enforced this mechanism and instead turned to Asian markets.
Ustenko emphasized the significant role that India, the world’s third-largest importer and consumer of crude oil, plays in this loophole. He explained that India has significantly increased its oil purchases from Russia over the past year. Before the military conflict, India’s imports of Russian oil were marginal, accounting for only around 1% of their total imported oil. However, this has dramatically changed, and Russian oil now constitutes almost 40% of India’s imports.
India’s Oil Minister, Hardeep Singh Puri, recently stated that India would continue to purchase crude oil from any source as long as it offers shipments at the lowest price. Ustenko revealed that Ukraine would like to garner support from G7 nations to bring the price cap down to just $30 per barrel. However, previous attempts to lower the price ceiling, led by Poland and the Baltic countries, were blocked by other EU members.
Closing the sanctions loophole is crucial for Ukraine, as it continues to be embroiled in a conflict with Russia over the annexation of Crimea and the ongoing unrest in eastern Ukraine. Tightening anti-Russia penalties would help to increase pressure on Moscow and limit its economic influence. By preventing third countries from benefiting from the refining and resale of Russian oil, it would also limit Russia’s ability to bypass Western sanctions.
In conclusion, Oleg Ustenko, the top economic adviser to the Ukrainian president, is calling on Western countries to close the sanctions loophole that allows third countries to refine and sell Russian oil without any restrictions. He specifically highlighted the role of India in this loophole, as the country has significantly increased its oil purchases from Russia. Ukraine aims to build support among G7 nations to bring the price cap on Russian seaborne oil exports down to $30 per barrel. Closing the loophole would increase pressure on Russia and limit its ability to bypass Western sanctions, which is crucial for Ukraine in its ongoing conflict with Russia.
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