$90 Billion Russian Oil Smuggling Ring: How the Kremlin is Evading Sanctions
A massive oil smuggling operation, potentially exceeding $90 billion, is helping the Kremlin fund its war in Ukraine, according to a recent investigation by the Financial Times. The scheme, uncovered due to an IT blunder revealing a shared email server, involves a network of nearly 50 companies working to disguise the origin of Russian crude, particularly from state-controlled Rosneft.
The Anatomy of the Smuggling Network
The 48 companies identified by the Financial Times appear independent but operate in concert, utilizing different physical addresses and specialized roles. Some entities purchase crude oil, while others sell it into key markets like India and China, often routing shipments through intermediary locations such as the UAE. This complex network obscures the true origin of the oil and the prices paid, making it tricky to enforce sanctions and the oil price cap.
US and EU Sanctions – A Catalyst for Deception
The intensification of these smuggling operations coincides with increased sanctions from the US and EU. In October 2025, the US sanctioned Russia’s largest oil exporters, Rosneft and Lukoil, significantly increasing the risk for potential foreign buyers. This prompted a surge in efforts to mask the origin of Russian crude. Since then, Redwood Global Supply, a previously unknown company within the network, has become the single largest exporter of Russian crude.
The Role of Azerbaijan
The companies involved are reportedly linked to a group of Azeri businessmen with strong ties to Rosneft. This connection highlights the international scope of the operation and the lengths to which Russia is going to circumvent sanctions. Latvia’s foreign minister, Baiba Braže, emphasized that this network makes enforcing the oil price cap “nearly impossible,” advocating for sanctions against the entire “ecosystem” involved.
EU Response and Future Sanctions
EU officials are considering new sanctions based on the Financial Times’ findings. They are observing “increasingly complex patterns” designed to bypass existing measures. The discovery of this network underscores the challenges of tracking and disrupting illicit financial flows supporting the Kremlin’s war effort.
A Familiar Tactic, Modern Scale
Sergey Vakulenko, former head of strategy at Gazprom Neft, noted that using a network of companies to obscure financial transactions is a long-standing practice, reminiscent of tactics used in the 1990s. However, the scale of this operation and its direct link to Rosneft are particularly noteworthy.
Impact on Global Oil Markets
The success of this smuggling ring has significant implications for global oil markets. By circumventing sanctions, Russia continues to generate substantial revenue from oil exports, mitigating the impact of Western economic pressure. This also distorts market prices and creates unfair competition for legitimate oil producers.
Frequently Asked Questions
What is the oil price cap? The oil price cap is a policy implemented by the G7 countries to limit the revenue Russia can earn from selling its oil, aiming to restrict funding for the war in Ukraine.
How does the smuggling ring bypass sanctions? The network disguises the origin of Russian oil by routing it through multiple companies and countries, making it difficult to trace back to Rosneft and enforce the price cap.
What is Redwood Global Supply’s role? Redwood Global Supply has emerged as the single largest exporter of Russian crude since the imposition of sanctions on Rosneft and Lukoil.
Are there any potential consequences for companies involved? Companies identified as part of the smuggling network face potential sanctions from the US, EU, and other countries.
