Diesel, kerosene and other fuels refined from Russian crude are flooding into Europe, prompting Kyiv to call for tightening sanctions against Moscow.

In an interview with POLITICO, Oleg Ustenko, an economic adviser to Ukrainian President Volodymyr Zelenskyy, appealed for the EU, as well as the U.K. and the U.S., to close the “loophole” that allows third countries like India, China and Turkey to refine crude bought from Moscow’s state energy firms into petrol, diesel and other products before selling them on without restrictions.

In December, the G7 agreed to set a price cap of $60 a barrel on Russian crude, meaning sales below that price are allowed. The idea was to squeeze Moscow financially while allowing oil markets to continue functioning.

The result has been that countries like India are buying up cheap Russian crude and then refining it — which earns local companies the refining margin — before selling it to other countries.

Indian imports of Russian crude hit a high of 69 million barrels in May, an almost tenfold increase from the same period in 2021 prior to Russia’s invasion of Ukraine — and more than twice as much as the 31 million it bought in May last year.

Volumes have since fallen to around 50 million barrels in July, but remain well above pre-war levels.

As a result, Indian exports of fuel products to the EU have skyrocketed. In June, it exported 5.1 million barrels of diesel and 3.2 million barrels of jet fuel to the bloc, up from just 1.68 million barrels and 0.51 million barrels respectively in June 2021.

Ustenko singled out India, given that “before the invasion, they were buying Russian oil but the level of their imports was very marginal, only around 1 percent of their imported oil. Now it’s on the level of almost 40 percent, which is a really dramatic change.”

For New Delhi, it’s just good business.

In an interview with CNBC last week, India’s Minister of Petroleum and Natural Gas Hardeep Singh Puri acknowledged his country’s privately owned refineries were snapping up Russian crude at rates well below the market price. “If there’s a 30 percent discount, the Russians are putting a ribbon around it and sending it to us free. That’s what it means.”

It’s also having a negative impact on Russia’s bottom line.

Russia’s energy export revenues have virtually halved in the first six months of this year, while the ruble has hit historic lows in recent weeks as sanctions begin to undermine the fundamentals of the Russian economy.

But as the war takes its toll on Ukraine, Kyiv wants to turn the screws even further.

Policymakers should support “a ban for all refined products going to G7 countries” if they’ve been produced using Russian oil, even if they were refined elsewhere, Ustenko said.

Ustenko added Kyiv wants to build support among G7 nations to bring the price cap down to just $30 a barrel. Poland and the Baltic countries pushed for a lower price last year, but countries like Greece — whose oil tankers transport a lot of Russian crude — balked.

These steps, Ustenko said: “Would be a huge signal to producers that it’s now completely illegal to touch Russian oil and to supply the regime with the blood money they are using to buy weapons and commit war crimes in Ukraine.”

However, the idea is unlikely to find much support, at least at the moment.

According to Maximillian Hess, a fellow at the Foreign Policy Research Institute and author of a new book on Russia sanctions, the refining of Russian crude by third countries isn’t so much a failure of the measures as it is the intended feature.

“Part of the West’s strategy, as the U.S. has said repeatedly, is to keep Russian oil flowing,” he said, while ensuring Moscow earns less for its exports and doesn’t earn the premiums that come from selling refined fuel rather than crude.

“There’s certainly appetite among some members of the G7 for a $30 price cap, but there may be some challenges introducing a ban on refined fuels,” he added.