Oil washing | Arabic Independent

Oil washing | Arabic Independent
Oil washing | Arabic Independent
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The concept of “oil laundering” is the same as the concept of “money laundering”, so that the trade in oil becomes legal. Today, the world is witnessing the largest oil laundering operation in history. This laundering process was sanctioned by US and European sanctions against Russia, and approved by the price ceiling agreement between the Group of Seven and the European Union.

The United States has been banning imports of oil and petroleum products for months. The European Union imposed a ban on Russian crude oil imports and imposed a price ceiling on the fifth of December (December) last. It is scheduled to implement a ban on imports of Russian oil products on the fifth of February (February) next. The interesting thing is that if Europe is trying to squeeze Russian President Vladimir Putin financially, why has it imported huge additional quantities of oil products from Russia in recent weeks and stockpiled them in preparation for the embargo?

Russian oil is still getting to the US and Europe in different ways, and it will continue to be so. There are old methods followed by the Iranians, which is loading Russian oil into ships that turn off the tracking devices, then these ships change the certificate of origin, and the ship may change its name and flag, then officially unload its cargo in a European or American port. The most complicated method is to unload the cargo in the middle of the sea in other ships until the trace of origin is completely lost, and thus Russian oil reaches Europe and America legally. More complicated than that is what the Russians are currently doing, which is mixing Russian oil with the oil of other countries, and the oil is given a new certificate of origin, and then the Russian oil reaches western countries, under different names.

However, the large volume of Russian oil exports, and the large reductions that accompanied them, greatly developed the “oil washing” process. These developments include:

1- A country imports Russian oil at reduced prices, then re-exports it as its own. Several countries carry out this process, the most important of which is India. In other words, the Netherlands or Britain imports crude oil from India, and it is recorded in the customs papers as Indian oil because it came from India, but it is actually Russian oil.

2- An oil country importing some cheap Russian oil products for local consumption, then this country exports its oil instead, or reduces production instead.

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3- However, the biggest development is China and India importing Russian oil at reduced prices, then refining it and selling oil products to the United States and Europe at world prices. It is a legal matter and was approved by the sanctions agreement that Russian oil can be imported if large conversion operations are carried out on it, such as the refining process! All private refineries in China are subject to export quotas set by the government that the refinery cannot exceed. At the beginning of the month, the Chinese government increased the shares by 50 percent in order to encourage these refineries to refine more Russian oil and export petroleum products. It is mentioned here that the large Chinese oil companies do not import Russian oil directly for fear of applying sanctions to them, since their shares are traded on international stock exchanges and they borrow from banks in various Western countries. However, it imports Russian oil through other countries, on the basis that it originates from those countries, especially from Malaysia. The data indicates that India and China’s diesel exports to Europe have reached record levels in recent weeks.

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Eurostat data indicates a continuous decrease in the European Union’s import of Russian oil products “officially”, while the European Union’s imports from the United States, Norway and Saudi Arabia increased. However, the big increase came from “other” countries, which included China and India. The European Union’s imports of Russian oil products decreased from about 26 percent of total imports of petroleum products at the beginning of the year, to about 14 percent in the third quarter. How did the European Union compensate for this decline?

The import of petroleum products from the United States increased the total imports of petroleum products from about 10 percent to 16 percent, from Norway from 9.5 percent to 10.5 percent, Iraq from 6.2 percent to 7.6 percent, and Saudi Arabia from 4.8 percent to 9.10. percent. As for the other countries, which include China and India, it increased from 15.1 percent to 21.1 percent. In other words, the significant decline in imports from Russia is an official decline on paper, and in reality it is less so because Russian oil “converted” through refining is imported from other countries.

When the application of sanctions and the price ceiling failed to raise oil prices significantly, traders, investors and analysts who promoted the idea of ​​higher prices said that stopping the import of oil products, starting from the fifth of February, would lead to a reduction in Russian production, and then a significant increase in oil prices. However, there is ample evidence that the impact of this ban will be limited. Russia has coordinated to open new markets with several countries, the latest of which was Pakistan. Hence, just as it transferred crude oil to other countries, it will also transfer oil products. On the other hand, any quantities that it cannot refine because there are no markets for it, which means sending this crude oil to India and China for refining and supplying it to Europe and America.

In sum, the European situation is strange, and the issue of “oil laundering” ultimately means shipping oil in less efficient ways than before, with higher costs and risks, and means that Russian oil will continue to flow to Europe and America in all cases.

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