Warnings over Russian ‘blood oil’ as Asian fuel imports increase
Experts and pro-Ukrainian groups say Australia’s growing dependence on Asian fuel puts the country at risk of importing sanctioned Russian “blood oil” through third countries as the US-Israeli war against Iran threatens global energy supplies.
The federal government has scrambled to shore up oil supplies after some fuel service stations dried up in panic after oil prices soared and Iran closed the Strait of Hormuz.
The disruption to global energy supplies is the latest flashpoint in an internal debate about Australia’s sanctions on Russian oil and the ethical issues facing businesses.
“Since the closure of the Strait of Hormuz, there has been a severe oil supply shortage globally, especially in Asia,” said Vaibhav Raghunandan, an analyst at the Center for Energy and Clean Air Research at a Finland-based think tank. “Russian oil stepped in to fill the gap.”
This includes Singapore, Brunei and Malaysia, three countries with which the federal government recently reaffirmed energy trading ties; It raises concerns that Russian oil processed by these countries will reach Australia.
Although direct oil imports from Russia are banned by Australia, domestic buyers can source the oil from a third country after it undergoes a “significant transformation” such as refining, in what critics call a loophole financing the Kremlin’s war against Ukraine.
An analysis of shipping and government data estimates by CREA, a charity-funded independent research organization focused on air pollution, found Australia has indirectly sent $2.4 billion to Moscow through the loophole since Russia invaded Ukraine in February 2022. This is a small slice of the $1.6 trillion Russia earned from all fossil fuel sales during this period.
Prime Minister Anthony Albanese announced last month that Australia had secured an extra 400 million liters of diesel, including from Brunei, Malaysia and South Korea. Ukrainian groups are concerned that Australia’s increasing fuel imports, particularly from Brunei, a major importer of Russian crude oil, will undermine our support for Kiev.
CREA analysis found that in the last 15 months, 3.2 million tonnes of petroleum products were imported into Australia from Brunei’s Hengyi refinery, which relies heavily on Russian crude and is jointly owned with China. 1.1 million tons of this was refined from Russian crude oil.
In March alone, seven shipments from the Hengyi refinery were unloaded into Australia.
Kateryna Argyrou, president of the Australian Federation of Ukrainian Organizations, said Labor could not claim to be siding with Ukraine “while allowing money to flow into the Kremlin’s coffers”.
“While Australia has taken a strong position to support Ukraine, it continues to import Russian fuel products through a sanctions loophole that allows Russian crude oil refined in third countries to enter our supply chains,” Argyrou said.
“While the Prime Minister is in contact with partners in Singapore, Malaysia and Brunei to secure fuel supplies, it is critical that Australia ensures we do not import more fuel derived from Russian crude or petroleum products.”
Argyrou said there was not only a “real risk that more Australian dollars would flow into the Russian war machine” but also into Iran, the Kremlin’s closest ally in the Middle East.
Raghunandan said the federal government should prioritize strengthening trade ties with South Korea, a more ethical refiner that has not imported crude oil from Russia since May 2022.
Albanese’s office referred questions to the Department of Foreign Affairs and Trade. A spokesman for the ministry said the government was focused on securing oil supplies and supporting broader energy security with key partners.
“We do not want to see Russia taking advantage of the conflict in the Middle East to finance its unjust war against Ukraine,” the spokesman said.
Ben Neville, associate professor of corporate sustainability at the University of Melbourne, said businesses needed to seriously consider the ethical implications of buying fuel containing Russian oil, even if it was unapproved.
“As humans, we must always integrate ethics into our decision-making processes, and this includes when we play a role in organizations,” he said. “Just walking into a corporate headquarters wearing a gray suit doesn’t mean you’ll suddenly be in a world devoid of ethics.”
Neville said that although there was a potential financial downside and corporate sustainability was often wrongly portrayed as a “left-wing woke ideology”, there was also a strong business case.
He pointed to BP’s decision to cut off its interests in Russia as the Kremlin plans to invade Ukraine for the first time in 2022 at a cost of $35 billion as an example of ethical decisions that are positive for business.
“This was a big economic decision that they had to make and it was based on ethical values that they couldn’t stay and be complicit in,” Neville said.
“If BP were to remain in Russia, Ukrainian-connected customers elsewhere in the Western world could easily boycott BP. It is the issue of business ethics that ultimately drives many of these business decisions, especially in the fossil fuel industry.”
He also said that having companies make ethical decisions benefits business by reducing the degree to which the government intervenes and regulates their industries.
Singapore, which recently promised to continue supplying fuel to Australia, increased its imports from Russia by 78 percent in March compared to the previous month. Imports of naphtha, used to make jet fuel and fertilizer, reached their highest level since November 2024.
More than half of Australia’s fuel imports come from Singapore, followed by South Korea, India, Malaysia and Brunei, according to the latest data from the federal Department of Energy.
Australia’s diesel imports are led by South Korea (29 percent), Singapore (15 percent), Malaysia (14 percent), Taiwan (12 percent) and Brunei (8 percent).
Asked about Singapore’s use of Russian oil to fill the war deficit, Singapore Prime Minister Lawrence Wong said getting more oil into the global market was a good thing.
Wong said Singaporean companies source oil from all over the world and must respect international sanctions, “but accordingly the oil is fungible.”
“As long as more oil enters the global energy market, that’s good for the world.”
Singapore processes, refines and blends fuels at its oil hub on Jurong Island; This could lead to it exporting a cocktail of products from several different origins and sources [including Russian]Dr Daiyan Rahman, an energy fuels expert at the University of NSW, said: “The fuel blended through this process is not thought to be ‘converted’ enough to be legal to import.”
But Rahman said the increasing amount of Russian fuel products entering Singapore had “definitely” increased the risk of Russian oil being imported into Australia.
Raghunandan said increased trade with Singapore without tightening import parameters “will undoubtedly lead to an increase in Russian molecules entering Australia”.
The Business Briefing newsletter delivers big stories, exclusive news and expert insights. Sign up to receive it every weekday morning.
Angus Delaney is a reporter for The Age. Email him at angus.delaney@theage.com.au or contact him securely on Signal at angusdelaney.31.Connect via email.
