Image composite from WSJ video below
Mish Talk: Hoot of the Day: Russian Oil Gets to US Via Sanction Loophole
I describe the round-trip process in which Russian oil refined in Italy makes its way to to the US. It's a real hoot.
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.
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WNU editor: The Wall Street Journal has an interesting video that describes how Russian crude avoids sanctions and ends up in the US (link here).
A child could understand this. Oil is a commodity. We still need it.
ReplyDeleteYet some are still dreaming of a price cap which just adds another arrow onto that loophole map, and another 50% price hike along the way.