Banned Russian oil is coming to Canada. Here's how

Millions of dollars worth of Russian oil is coming into Canada thanks to a loophole in federal sanctions, providing much-needed income for the Kremlin to fuel its ongoing invasion of Ukraine.

CBC News's visual investigations team, in collaboration with the Centre for Research on Energy and Clean Air (CREA), found that since the start of the Ukraine war roughly 2.5 million barrels — or $250 million worth of refined petroleum products like gasoline, diesel and jet fuel — have ended up in Canada. 

Based on calculations made by CREA, those Canadian oil imports have provided the Kremlin with just over $100 million in revenue, enough to recruit thousands of soldiers in Russia.

"When consumers in Canada are buying vehicle fuels or getting on flights, there is a high probability that a proportion of those jet fuels or diesels ... could be made from Russian crude," said Isaac Levi, Europe-Russia Policy and Energy Analysis team lead at the Centre for Research on Energy and Clean Air.

The crude oil originates in Russia, but because it is refined in another country like India or Turkey and mixed with crude from other sources before being exported to Canada, it does not violate sanctions.

"We're calling for the refining loophole to be closed and this process to be banned," said Levi.

Sanctions compliance, according to William Pellerin, international trade lawyer at McMillan LLP, is "more difficult because of a lack of clarity in the Canadian sanctions regime."

"It's very clear that Russian crude is prohibited from being imported into Canada. It's also very clear that non-crude Russian oil products are prohibited from entering into Canada," said Pellerin.

"What is not clear is … the use of Russian crude imports that then get processed and finished by a third country."

Some of the crude oil — according to data on port visits by vessels, satellite imagery and ship traffic data provided by Marine Traffic — is shipped to those refineries by Russia's "shadow fleet" — a group of tankers widely said to evade sanctions and international oil price cap rules, which limit the price at which Russia can sell its oil.

"[The loophole] undermines the overall intent, not just of sanctions, but of the whole effort to support Ukraine and punish and try to change Russia's behaviour," said Jane Boulden, a political science professor at Queen's University in Kingston, Ont.

Last week, the U.S. Treasury Department announced a raft of new sanctions against two major Russian oil producers and 183 vessels — many in the shadow fleet — to crack down on what it called "third-country entities" facilitating the Russian oil trade. 

"The United States is taking sweeping action against Russia's key source of revenue for funding its brutal and illegal war against Ukraine," said Secretary of the Treasury Janet Yellen in a statement.

Shortly after Russia invaded Ukraine in February 2022, Canada, the U.K. and the U.S. banned Russian crude and petroleum oil products in an effort to hobble Russia's economy. Later that year, the G7 enacted price cap rules to limit the price of Russia oil to $60 US per barrel.