UK investigates 37 breaches of Russian oil sanctions: government

The UK government has 37 open investigations of suspected breaches of sanctions against the Russian oil industry, the country’s finance ministry said.

Enforcement of sanctions by the UK and other G7 countries has been tricky, and many industry participants believe significant volumes of Russian oil are sold above stipulated price caps.

“The Government is committed to rigorously enforcing our sanctions, keeps all our sanctions under review, and will not hesitate to take further action to limit Russian revenues which fuel its war machine,” a UK government spokesperson told S&P Global Commodity Insights in response to a question about breaches of the price caps.

“There are already a number of active investigations, and the newly launched Office of Trade Sanctions Implementation will boost our ability to investigate reports of trade sanctions breaches and issue tough penalties for breaches,” the spokesperson said late Oct. 11.

There are 37 open investigations for breaches against an unspecified number of companies as of August, the spokesperson said.

“The G7+ Oil Price Cap is reducing oil revenues for Russia – data from its own Ministry of Finance shows that there was a 30% reduction in Russian government tax revenues from oil in 2023 compared to 2022,” the UK government spokesperson said.

The remarks came after the British government had blacklisted tanker managers and operators, ships themselves, and Russian insurer Ingosstrakh for alleged breach of the price caps.

Evolving sanctions environment

To undermine Russia’s war chest against Ukraine, the G7 and the European Union have banned the provision of maritime services like insurance to Russia crude shipments sold at over $60/b, products that typically trade at a premium to crude at $100/b, and those that generally trade at a discount to crude at $45/b.

Platts, part of S&P Global Commodity Insights, assessed Urals FOB Primorsk at $66/b Oct. 11, and it has mostly been above $60/b since the start of the year.

Under the terms of the price cap, providers of maritime services such as insurance in the G7 cannot provide services to vessels carrying Russian barrels if the prices of those barrels exceed the price caps. This was easier to enforce when prices were lower, but has been harder since they rose, market watchers said.

“We have been told for some time that OFSI was investigating entities in the maritime sector,” Sue Millar, a partner at Stephenson Harwood LLP told Commodity Insights.

“Investigations take longer than we think they should, especially in relation to oil caps where the UK's rules are stricter (or at least more involved) than other jurisdictions. But we may have now reached the point where we start to see enforcement activity and public notices issued,” she said.

The share of Russian crude exports on tankers operating outside of the G7’s price cap hit a new high in September, as shadow operators in the Seychelles stepped up to support a recovery of the country’s shipments to overseas customers.

Data from S&P Global Commodities at Sea(opens in a new tab) and Maritime Intelligence Risk Suite suggested 83.8% of Russia’s seaborne exports last month were lifted by tankers not flagged, owned or operated by companies based in the G7, the EU, Australia, Switzerland and Norway, and not insured by Western protection and indemnity clubs.