OIL SMUGGLING AND BLACK MARKETS

On 9th October, Yale Global online carried a report which says that a flourishing black market exists for oil products, with about $133 billion worth of fuels stolen or adulterated every year, and that this helps fund dangerous non-state actors such as the Islamic State, Mexican drug cartels, Italian Mafia, Eastern European criminal groups, Libyan militias, Nigerian rebels and more – and are a major global security concern.  It says that the top 5 countries accused of oil trafficking – Nigeria, Mexico, Iraq, Russia, and Indonesia – are also oil producers.  It is estimated that Nigeria alone loses $1.5 billion a month due to pipeline tapping, illegal production and other sophisticated schemes.  In SE Asia, about 3% of the fuel consumed is sourced from the black market, estimated to be worth up to $10 billion a year.  In Mexico, drug cartels are said to launder drug revenues through the oil trade.  It also cites non-producer Turkey, saying that it serves as a major transit route for oil flowing to Europe from countries like Iraq and Iran.  Lower oil prices in Eastern Europe have created maritime smuggling routes to the UK and Ireland – Ireland estimates it loses up to $200 million annually with fuel fraud, while up to 20% of fuel sold in regular gas stations in Greece is said to be illicit.  The article says that much of the illegal fuel trade is conducted at sea – with the transfer of illegal fuel often done ship to ship, though armed theft and piracy also occurs – with one ship commercially legal, carrying legitimate imports at the final port of destination.  The article says that the first global conference on fuel theft, held in Geneva in April, may be a watershed moment and refers to a report which it says is the most extensive examination of illicit downstream hydrocarbons activity published to date.  It concludes by saying that unless monitored and addressed by robust policy and regulation, the illegal oil activities will remain a key funding source for terrorism, organised crime, authoritarian states and violent non-state actors.

https://yaleglobal.yale.edu/content/worlds-most-dangerous-black-markets

The Atlantic Council report referred to is available at –

http://www.atlanticcouncil.org/images/publications/Downstream_Oil_Theft_web_0327.pdf

Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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