In response to Russia’s 2022 invasion of Ukraine, the UK and other nations imposed strict sanctions to curb Russia's ability to fund its war efforts. A key part of these sanctions was a cap on Russian oil prices, aimed at limiting the country’s revenue from its primary export. However, investigations suggest that UK-linked firms may be breaking these rules by helping Russia sell oil at prices higher than allowed.
Despite the ongoing investigations, no penalties have been issued, raising questions about the effectiveness of the sanctions.
Purpose of Sanctions The UK’s sanctions on Russian oil limit the price to $60 per barrel to reduce Russia's income from its oil exports. Oil is a major source of revenue for Russia, and keeping prices low is intended to diminish its financial capacity. UK-linked businesses involved in transporting or insuring Russian oil are required to adhere to these rules. If they facilitate oil sales above the $60 limit, they are violating sanctions.
Data obtained by the BBC reveals that, since December 2022, 52 UK-linked businesses have been investigated for possibly breaching the oil price cap. These investigations are managed by the Office of Financial Sanctions Implementation (OFSI), a unit within the Treasury responsible for enforcing sanctions. As of August 2023, 37 of these investigations are still active, while 15 have concluded, but none have resulted in fines.
Many of the firms under investigation are thought to be maritime insurance companies, which play a critical role in global oil shipping. If found to have insured or transported oil sold above the price cap, these firms could face significant penalties. However, the lack of enforcement so far has sparked criticism.
With 37 investigations still ongoing, pressure is mounting on the government to take more decisive steps. Critics argue that if no penalties are issued, the sanctions risk becoming ineffective, allowing UK businesses to continue indirectly supporting Russia’s oil revenues, and by extension, its war efforts in Ukraine.
EU Implements new Sanctions against Russia
The UK's challenges in enforcing oil price caps on Russian exports come at a time when the EU is also intensifying its efforts to counter Russia’s destabilising activities. On 8th October 2024, the Council of the EU enacted new sanctions under Regulation (EU) 2024/2642, which target individuals and entities involved in actions that undermine democratic processes and security. This coordinated international response demonstrates a unified stance against Russia’s influence, reinforcing the importance of sanctions in curbing both its economic capabilities and its hybrid activities abroad. Source BBC
Are you exporting or thinking of exporting to Russia but unsure about whether your goods require a licence or compliance? Are you in need of expert guidance through the minefield of export licences?
The Chamber offers a comprehensive array of export control and licence services, both in Manchester and beyond, available for face-to-face or virtual consultations:
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For more detailed information on any of the services listed above or to discuss your specific requirements, please don't hesitate to contact our expert team at international@gmchamber.co.uk. We're here to assist you in navigating the complexities of export control and licensing with confidence.
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