General Studies Paper 2

Context:  A report by Finland based group cited that India is leader of five countries named as the “Laundromat” countries.

  • European Countries that imposed crude oil sanctions on Russia oil are using India, others as ‘laundromats’ for refined products.
  • The report accused Indian sellers and European buyers of possibly “circumventing sanctions”by selling crude products from a refinery in Gujarat that is co-owned by Russian oil company Rosneft.

What are ‘Laundromat’ Countries?

  • The so-called “laundromat” countries are countries that buy Russian oil and sell processed products to European countries, thus sidestepping European sanctions against Russian Oil.
  • The five countries (India, China, Turkey, UAE and Singapore) are identified as ‘laundromats’ for Western countries by the Centre for Research on Energy and Clean Air (CREA).
  • The five countries are responsible for 70 percent of Russia’s crude oil exports, the study highlighted.

Process of Circumventing sanctions (White-washing of Russian Oil)

  • European countries are simply substituting oil products they previously bought directly from Russia, with the same products now “whitewashed” in third countries and bought from them at a premium.

Price Cap Coalition

  • A coalition of G7 countries, the European Union and Australia have agreed to prohibit the import of crude oil and petroleum products of Russian origin, supported by a broad range of companies involved in the transport of oil.
  • The G7 Oil Price Cap for crude oil of US$60 per barrel came into effect 5 December 2022.
  • India’s stand is to remain non-committal on any such pricing cap arrangement.
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