China, India, Singapore, the United Arab Emirates, and Turkey have been identified as “laundromat countries” by the Centre for Research on Energy and Clean Air (CREA). Since the Russian invasion of Ukraine, these countries have expanded their imports in Russian crude oil. They then refine it into products exported to countries which imposed sanctions on Russia. This endeavour is highly undermining the price cap on Russian oil.
Key Judgement 1: Price-cap coalition countries are highly dependent on refined oil products. Hence, a change in sanctions to ban Russian oil refined in third countries is unlikely in the next 12 months.
Key Judgement 2: If remaining unchanged, the current sanctions on Russian oil are highly likely to be ineffective in the next 12 months, as they only target one side of the issue.
Key Judgement 3: “Laundromats countries” are likely to continue their activity in the next 12 months, due to the profits it generates.