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Policy brief

Sanctions Evasion and Derogation on Russian Oil

Policy Brief No. 140

The Russian invasion in Ukraine has demonstrated the need for the EU to develop and implement a coherent policy vision for economic security. However, the current sanctions will not be able to achieve the longer-term objective of strategic decoupling from Russia, as they are designed to allow Russia to continue exporting energy. The oil embargo on Russia presents a critical challenge for European and US authorities seeking to curtail Russian crude and oil product exports. While the sanctions are designed to restrict these exports, several factors are hindering their effective implementation, leaving room for evasion. There is an urgent need to strengthen the implementation and enforcement of the oil sanctions to ensure that crude oil and fuel products are not delivered to customers by Russia-linked third parties such as newly registered oil trading companies with unclear ultimate beneficial ownership and existing global commodity traders exploiting loopholes that mask the origin of their oil and oil products.

The following analysis is based on a joint investigation between CSD, Global Witness and the Centre for Research on Energy and Clean Air, which highlight key issues related to sanctions evasion and the strategic decoupling from Russian oil, with a particular focus on the case of Lukoil. It lays out some targeted policy strategies for closing the governance gaps allowing Russia to continue earning billions in profits from selling energy across the world and financing the war in Ukraine.

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