Hoot of the Day: Russian Oil Gets to US Via Sanction Loophole

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    by Mish Shedlock, Mish Talk:

    I describe the roundtrip process in which Russian oil refined in Italy makes its way to to the US. It’s a real hoot.

    The Wall Street Journal has an interesting video that describes How Russian Crude Avoids Sanctions and Ends Up in the US.

    With an upfront ad, that is a free WSJ video link.

    The Lukoil Connection

    TRUTH LIVES on at https://sgtreport.tv/

    Image composite from WSJ video below 

    Image composite from WSJ video

    Sanction Avoidance Process 

    • US sanctions are on crude oil, not refined products.
    • Lukoil, Russia’s second largest oil and gas company was not sanctioned by the US.
    • Lukoil’s refinery in Sicily is the second largest in Italy and fifth largest in Europe.
    • A Lukoil refinery in Italy once processed crude from multiple countries. Now it inputs are 93 percent from Russia.
    • After refining, the country of origin is Italy, not Russia. This is due to longstanding practice of changing the country of origin to where oil is refined.
    • The refined product then makes its way Exxon and Lukoil plants in New Jersey and Texas.
    • Lukoil still has a gas station presence in the US and it distributes products to eleven states.

    Lukoil Stations in 11 US States

    Image composite from WSJ video

    Image composite from WSJ video

    Note: Most of the 230 Lukoil gas stations in the US are owned by individual American franchisees, not the oil giant itself.

    Understanding the Process

    • The US has sanction exclusions for oil “substantially transformed into a foreign-made product.”
    • US refiners cannot process Russian crude, but Italian refiners can, then distribute the product here.
    • In return, US can send its refined products to the EU, completing the round trip!

    Lukoil is 6th largest refiner in Europe. It went from processing 30% Russian oil to 93%. That’s a pretty big sieve even if amounts to US are small.

    Conveniently timed for the US election, European bans on Lukoil do not come into play until December 5.

    Read More @ MishTalk.com