The US moves to fix a sanctions loophole - and further support Ukraine

Since last summer, Global Witness has been reporting on the “refining loophole” in countries that have banned Russian oil. Now, there is political momentum in the US to fix this problem with sanctions and close one stream of revenue still flowing to the Kremlin, as its brutal war against Ukraine continues.

Sanctions that Western countries imposed after Russia’s invasion of Ukraine, in February 2022, were designed to limit Russia’s oil earnings — one of the Kremlin’s essential revenue streams — which partly fund the war. Although Russian oil and gas revenues fell in 2023 compared to the same months in 2022,  Russia is still able to sell climate-wrecking oil on global markets, keeping its war chest funded.

One of the ways Russia has thwarted global sanctions is exploiting so-called refining loopholes in the very same countries that have banned the direct import of its oil, like the US and UK. It’s currently legal for firms in those countries to import products refined from Russian oil, provided the refining is done in a third country.

Global Witness has been calling this out since the summer of 2022. This August, we showed that the UK’s purchases of loophole products this year have been worth at least £40 million to the Kremlin, in taxes on the oil produced in Russia. In November, we released new research showing that the Kremlin has also made at least $180 million on the oil used to make refined products imported to the US in 2023. To put these numbers in context, $180 million would buy some 8,600 of the military drones Russia has been using to bombard Ukraine.

Now, following months of our engagement and research, Congressman Lloyd Doggett (D-TX) has introduced legislation that would close this loophole in the US. Co-sponsored by over 50 US Representatives, including both Republicans and Democrats, the bill would amend existing law to ban the import of petroleum products from any refinery using Russian crude. On December 5, members of our Stop Russian Oil team were on Capitol Hill delivering a Congressional briefing on why closing this refining loophole is so important as we approach the two-year anniversary of Russia’s invasion of Ukraine.