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Russian Oil Sneaks into U.S. Military Supplies Amid Sanctions

Russian oil is reportedly seeping into the U.S. military’s supply chain, despite stringent sanctions and bans on Russian energy products following its invasion of Ukraine. This revelation, emerging from a Washington Post analysis, highlights a complex web of global trade that’s circumventing the West’s efforts to isolate Russia economically.

The story centers around the Motor Oil Hellas refinery in Greece, a key supplier for the U.S. military. Following the West’s ban on Russian oil exports, the refinery claimed a shift to alternative fuel sources. However, shipping data analyzed by the Post suggests a different narrative. It appears that Russian oil was merely changing hands, initially being shipped to Dortyol, a storage terminal in Turkey, before making its way to Greece.

The exact volume of Russian-origin crude purchased by the U.S. military remains unclear. Nonetheless, the Department of Defense awarded nearly $1 billion in contracts to Motor Oil Hellas since the onset of the Ukraine invasion in 2022—a notable increase from the previous year, as per findings from the watchdog group Project on Government Oversight.

Further data indicates that a significant portion of oil shipments to Motor Oil Hellas originated from Dortyol, with a large fraction of Dortyol’s shipments tracing back to Russia. This scenario places the Pentagon in a paradoxical position: while the U.S. government actively supports Ukraine against Russia’s aggression, it inadvertently might be buying products containing Russian fossil fuels, inadvertently funding the very adversary it seeks to combat.

Experts suggest that Russia has adeptly navigated around Western sanctions aimed at curtailing its war revenue by masking its energy trade. Reports last year indicated Moscow’s creation of a “shadow fleet” of tankers to disguise its oil’s origins. Additionally, some analysts believe that Russian oil is being sold well above the West’s imposed $60 per barrel price cap, partly due to this covert fleet and inflated shipping costs that obscure the real prices paid by buyers.

For investors and entrepreneurs, this unfolding situation sheds light on the complexities and unintended consequences in the world of international trade and sanctions. It underscores the challenges in enforcing global economic policies and the ingenuity with which countries can bypass restrictions. As the geopolitical landscape continues to evolve, keeping an eye on these developments is crucial for understanding broader market dynamics and the interconnectedness of global economies.