Industry Insights

Illicit Trade and Brand Protection in the Oil and Downstream Industry

Supply Chain Intelligence and recent trends

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 2022, Africa’s biggest oil producer specified that Nigeria was losing 95% of oil production at its Bonny terminal to theft.
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).

Insights from illicit Motor Oil Enforcements

ApiraSol’s enforcement databases keep track of counterfeit and smuggled oil-related products globally. Our metrics reveal key trends in international illicit trade.

Significant Oil Theft in 2020

Interactive Map, only showing regions with available data.

Russia, one of the world’s biggest oil producers, is unquestionably a market worth watching in 2023 from both an importer and exporter perspective:

Shipments of motor oils to Russia. With the beginning of the Russia-Ukraine war, motor oil brands left the market, leaving an opportunity for third-party traders to satisfy demand. Brand owners may not be aware of such shipments which can go against sanctions in place against Russia.
Shipments of motor oils from Russia. Russian infringers are renowned for counterfeit oil manufacturing and are exporting oil products.
ApiraSol mapped suspicious Motor Oil shipments TO and OUT of Russia between Jan - May 2023:
The top exporting countries of Motor Oil to Russia between Jan - May 2023 are:
The top destination countries of Motor Oil exports from Russia between Jan - May 2023 are:

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