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The UK, and the global community, has by and large responded to this through an ever increasing ratcheting of economic sanctions against Russia and its allies to pressure a peaceful resolution. 2022 saw a record number of entities added to the OFSI sanctions lists with the expectation that 2023 will bring a similar amount of designated persons.
Below we have summarised some of the latest developments for 2023 and looked at how the sanctions regime can, and may, be further extended.
Oil price cap
In 2022, the oil price cap came into full force which was a long awaited measure to target Russia’s biggest export sector. Alongside other G7 nations, the European Union and Australia, the UK implemented a price cap on Russian oil products. This is currently set at $100 for diesel and gasoline and $45 for fuel oil and already adds to the existing price cap of $60 on crude oil. The aim of this price cap is to limit revenue derived by Russia from its energy sources. However, through sanctions actions already taken so far the UK has banned all import of Russian oil products and whilst this means that it will not be utilised in the UK it should be noted for companies who are part of international group. The price caps are due to be kept under review and whilst the current live pricing is below the cap, we anticipate that the cap may be lowered further to exert more pressure – this may in turn result in a lowering of output by Russia and its partners which is expected to impact on global energy prices.
A further ban on export to Russia, of products which were described by the UK government as banning ‘every item Russia has been found using on the battlefield to date’, was also recently announced. This ban includes component parts used in the production of UAVs. Please note that a large number of products listed under specified commodity codes are already captured. The UK government also announced a ban on import of 140 goods including iron and steel products which are processed in third countries – however we have yet to see the regulations that underpin this.
Iran has been found to be assisting Russia with the supply of Unmanned Aerial Vehicles (UAVs) and in response to this the UK government has already sanctioned numerous Iranian individuals. Extending this further, additional sanctions against Iranian individuals who have supported the Russian war effort have been announced.
As 2023 progresses we anticipate further measures will be adopted by the UK, EU and US to hinder the Russian economy. We have already seen an extension of conventional trade sanctions to include the provision of services such as those provided by the financial services sector, advertising sector, auditing and business consulting sectors (amongst others) – we also anticipate that this may extend to further professional services firms due to the UK’s role as a large global exporter of services.
If you are unsure on how to manage your existing contracts, or require assistance with any new business relationships which may be impacted by the sanctions regime then please contact TLT’s Regulatory team for specialist advice.
06 March 2023
Insights 31 AUGUST 2023