The subject of illicit oil trade has always been a topic of discussion for the public and private sector.
Global oil theft is estimated to be at US$133 billion per year (Bonnier and Bonnier 2019; Desjardins 2017), which is approx 5-7% of all crude oil and refined fuels produced.
The following observations and calculations provide insights into the scope and frequency of worldwide oil theft, the illegal fuel trade, and oil sector fraud:
In 2013, the Algerian energy authorities reported a US$1.3 billion loss per year due to fuel smuggling to neighboring countries (Al Makhifi 2013).
In 2015, during the Syrian civil war, the Islamic State of Iraq and al-Sham (ISIS) made US$40 million a month from selling crude oil to brokers. Some of the crude oil would be refined into low-grade fuel for smuggling into Turkey (using tanker trucks and cross-border irrigation pipes, making fortunes for local villagers). ISIS sold most of its oil to the Assad regime, despite being its arch-enemy (Ralby et al. 2017).
Turkey imports 2.7 million tons of smuggled fuel annually, depriving its government of US$2.5 billion in tax income. While the number of cars on the road in Turkey increased by 70% from 2003 to 2010, the rise in recorded fuel consumption was only 20 % (Ralby et al. 2017).
Russia’s state-owned investment bank VTB Capital estimated that in 2013 Russian oil companies were losing between US$1.8 billion and US$3.5 billion annually due to oil theft (KhazovCassia 2021).
In 2015, Chinese customs arrested 250 people from two criminal syndicates involved with the illegal import of 440,000 tons of untaxed fuel from ship vessels, worth US$355 million (Chen 2015).
Three million liters of fuel are smuggled daily over land alone, from Malaysia to Thailand, valued per year at US$1.2 billion in Thailand and US$0.54 billion in Malaysia (Ralby et al.2017).
In 2021, Guangdong (China) police arrested several people for illicit trade and sales of light cycle oil (LCO). Between 2019 and 2021, China LCO imports increased from 142,000 to 511,500 barrels per day, as traders exploited a tax loophole exempting LCO from consumption tax. China’s unnaturally high LCO demand would have resulted in US$3.9 billion in avoided taxes annually if authorities had not intervened (Chen and Samanta 2021a, 2021b).