Shell CEO points out loopholes in Russian oil sanctions after announcing record profits

May 5, 2022, 3:16 PM UTC

Planned embargoes on Russian oil may be thwarted due to the way the global crude supply chain works, Shell’s CEO explained on Thursday.

Speaking after Shell reported record quarterly profits, Ben van Beurden, the oil giant boss, told reporters that the framework of the world’s crude network left loopholes open in Western government bans on Russian oil.

This is because imported fuels like gasoline, which might have been made from Russian oil but refined outside of Russia, cannot always be traced back to their natural source.

“We do not have systems in the world that trace back whether [a] particular molecule originated from a geological formation in Russia,” Van Beurden said, according to news agency Reuters.

“That doesn’t exist. Therefore, diesel coming out of an Indian refinery that was fed with Russian crude is considered to be Indian diesel.”

The U.K. and the U.S. both announced plans to ban imports of Russian oil in March, while the EU Commission p president, Ursula von der Leyen, yesterday proposed phasing out Russian crude within six months.

Shell announced in March that it would withdraw from the Russian market, beginning with an immediate cessation of Russian crude oil purchases.

The company confirmed in its earnings report on Thursday that it had taken $3.9 billion of post-tax charges in the first quarter as a result of its “decisive action on Russia.”

According to the White House, the U.S. imported almost 700,000 barrels of crude oil and refined petroleum products a day from Russia last year.

But the majority of Russian oil exports go to Europe, with around two-thirds going to European nations last year, according to data from the IEA.

China, where around 20% of Russian oil was exported in 2021, is the single biggest buyer of Russian oil, the IEA’s figures show.  

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