UK announces new Russia sanctions targets; EU measures to follow

The UK on Nov. 8 applied sanctions against 29 more individuals and entities linked to Russia in a crackdown on oil and metals "networks propping up Russia's war economy," the Foreign, Commonwealth and Development Office said.

In a statement, the FCDO said more than 1,800 individuals, entities and groups were now the target of sanctions in relation to the invasion of Ukraine. Such sanctions "continue to deal a heavy blow to the Kremlin's war economy, to date depriving [President Vladimir] Putin of over $400 billion to fund his illegal invasion of Ukraine," Foreign Secretary James Cleverly said. "But we must keep tightening the screws on Moscow," he added.

The new targets include Paramount Energy & Commodities DMCC, likely based in Dubai and said by the FCDO to be "used by Russia to soften the blow of oil-related sanctions imposed by the UK in coordination with G7 partners."

Switzerland-based Paramount Energy & Commodities SA, thought to be linked to the Dubai-based entity, did not respond to a request for comment.

Other targets include the influential Russian Union of Industrialists and Entrepreneurs.

The EU is shortly expected to roll out a 12th Russian sanctions package, trailed by European Commission President Ursula von der Leyen in a speech in Kyiv on Nov. 4. "The new sanctions shall include up to 100 new listed individuals, new import and export bans, actions to tighten the oil price cap, and tough measures on third-country companies which circumvent the sanctions," she said at the time.

The new EU measures will be proposed "in the coming days" for adoption by heads of government, a spokesperson for the EC told S&P Global Commodity Insights.

In response to Russia's invasion of Ukraine the EU and UK have imposed a wide range of sanctions on Russia's oil sector including bans on oil imports, and restrictions designed to outlaw services for the trading of Russian crude above a $60/b price cap.

Critics have suggested it is the rigor of enforcement efforts, as much as the regulations themselves, that is critical to their effectiveness. Russia has shifted much of its oil export flows to Asia, with Indian refineries becoming a major consumer of Russian crude.

In October, 43% of seaborne Russian crude exports were earmarked for India and a further 1 million b/d, or 29%, were headed for China, according to tanker-tracking data from S&P Global Commodities at Sea.

The Urals DAP West Coast India discount to Forward Dated Brent stood at $4.45/b on Nov 7, almost the tightest margin since S&P Global Commodity Insights unit Platts began assessing the spread at $19/b in January.

Spot prices for Russia's Urals grade have been trading above the G7's $60/b price cap since July 11 but Moscow has been successful in redirecting its oil to non-Western customers through a growing shadow tanker fleet and, until recently, tepid sanctions enforcement by the US.