UK loosens Russian oil sanctions as fuel prices rise

The UK government has announced a relaxation of its strict sanctions on Russian oil refined into diesel and jet fuel in third countries due to escalating fuel prices. This waiver is set to take effect on Wednesday, driven by rising supply concerns stemming from the effective blockade of the crucial Strait of Hormuz, which has been impacted by the ongoing US-Israel conflict with Iran.

In addition, certain sanctions on the transport of Russian liquefied natural gas (LNG) have also been lifted.

The government clarified that while overall sanctions have become more stringent, there is a necessity for added flexibility in these specific sectors. This decision follows a similar move by the United States, which faced significant criticism.

Following the onset of the war, European jet fuel prices skyrocketed, but they currently remain approximately 50% higher than pre-war levels, while fuel prices at UK pumps continue to trend upwards. According to the RAC, a prominent motoring organization, the average price for unleaded petrol hit 152.52 pence per litre on Monday, marking the highest rate observed since the conflict began.

Numerous airlines operating in the UK and globally have responded to surging jet fuel prices by canceling flights and increasing fares.

Background on UK sanctions policy

The UK has spearheaded international initiatives aimed at exerting economic pressure on Russia due to its ongoing conflict in Ukraine. Just a day prior, the government endorsed a G7 statement reaffirming its "unwavering commitment" to impose "severe costs" on Russia.

Previously, as of October, the UK enforced a ban on the importation of diesel and jet fuel refined from Russian crude oil in third nations. The current easing of sanctions will effectively re-enable imports of jet fuel from India, which was once a primary supplier to both the UK and Europe. Additionally, a significant amount of Russian crude is refined in Turkey.

New regulations

The newly established regulations concerning sanctioned processed oil products will be of "indefinite duration"; however, they will undergo periodic reviews and may be subject to amendments or revocations, as stated by government officials.

Moreover, the UK has issued a limited-time license that pertains to the maritime transportation of LNG and associated services under existing Russia sanctions, with a validity period extending until January 1.

International context

Earlier this week, the United States opted to extend a similar waiver, initially introduced in March, which alleviated sanctions that prevented other nations from purchasing Russian oil and petroleum that were already loaded onto ships at sea.

U.S. Treasury Secretary Scott Bessent indicated in March that this "short-term measure" aimed to foster "stability in global energy markets."

This policy has drawn criticism from several U.S. and UK allies, who argue it effectively supports the regime of Russian President Vladimir Putin amid his full-scale invasion of Ukraine, ongoing since 2022.

French President Emmanuel Macron has contended that the closure of the Strait of Hormuz "in no way" justifies the lifting of sanctions on Russia, while Ukrainian President Volodymyr Zelensky has remarked that "every dollar paid for Russian oil is money for the war."

Conversely, UK Foreign Secretary Yvette Cooper refrained from criticizing the U.S. decision in March, referring to it as a "specific, targeted issue."

UK government statement

A spokesperson for the UK government announced on Tuesday that they have "introduced a range of new prohibitions under the Russia sanctions regime."

"This includes further export and import bans against Russia, encompassing restrictions on the sale of refined oil products derived from Russian crude oil and the import, supply, and delivery to third countries of Russian uranium," the spokesperson elaborated.

"These sanctions also entail a ban on maritime services related to Russian LNG. These measures will progressively limit Russia's access to the UK's world-leading shipping and insurance services, thereby disrupting their capacity to transport Russian LNG."

"We remain committed to enhancing our sanctions against Russia to undermine its capacity to conduct warfare in Ukraine, all while safeguarding essential supply chains and maintaining market stability."