Putin’s blood oil profits untouched by Australia’s toothless sanctions

Australia has become an international outlier by allowing fuel made from Russian crude oil to enter the country, a parliament inquiry has found, urging the federal government to close loopholes that allow Moscow to profit from imports through third countries.

A damning report into the effectiveness of Australia’s sanctions regime also found not a single person has been prosecuted for breaching Russia-related sanctions since Vladimir Putin’s full-scale invasion of Ukraine in 2022.

The cross-party Foreign Affairs, Defence and Trade References Committee, tabled on Thursday , called on the government to urgently tighten the laws and better align Australia’s approach with the European Union, Britain and other allies.

Among 11 recommendations, it urged the banning of Russian blended oils and other products, including timber, that can be transformed in third countries before being legally imported.

The report says Australia should also identify all Russian assets subject to sanctions and consider giving agencies more resources to investigate, freeze and seize them.

The committee, chaired by Liberal senator Jess Collins, acknowledged that seizing sovereign Russian assets carried legal and financial risks, but argued Australia should nevertheless examine the option.

“The case for seizing and repurposing Russian assets is strong,” the report found, noting that “immense sums” would be required to ensure the European Union’s security if Russia emerged victorious.

“Supporting Ukraine to prevent a Russian victory instead is an economically sound alternative.”

As revealed in several reports by this masthead last year in its Blood Oil series , Russian crude continues to be shipped to countries such as India, refined into petrol, diesel and other products, and then sold into Australia.

The committee found Australia had become “the largest single-country importer of oil products refined from Russian crude oil”.

That trade has flourished as Australia has become increasingly dependent on imported refined fuel after the closure of five domestic refineries.

Refined petroleum imports more than doubled from $19.9 billion in 2014 to $48.5 billion in 2024, while crude oil imports fell to $8 billion.

The US-led strikes on Iran and the closure of the Strait of Hormuz in February also forced Australia into panic-buying Asian fuel, inadvertently exposing its supply chain to laundered, sanctioned Russian oil.

The committee warned Russia was continuing to benefit even when its oil was transformed overseas before reaching Australian shores. It urged the government to stop allowing the complexity of global fuel markets to become an excuse for delay, warning against “sanctions policy paralysis”.