Sanctions tracker: new UK sanctions regarding Russian oil

The UK introduced further sanctions against Russia on 4 November 2022, via the Russia (Sanctions) (EU Exit) (Amendment) (No. 16) Regulations 2022 (the "No. 16 Regulations"). These introduce further amendments to the Russia (Sanctions) (EU Exit) Regulations 2019 (the "Russia Regulations"). The amendments introduced by the No. 16 Regulations will come into force on 5 December 2022 (although, as set out below, certain specific measures will not take effect until February 2023) and introduce further measures relating to Russian oil, as discussed further in this briefing.

Additional Russian oil restrictions

The No. 16 Regulations introduce prohibitions relating to Russian-origin oil and oil products falling within commodity codes 2709 (petroleum oils and oils obtained from bituminous materials, crude) and 2710 (petroleum oils and oils obtained from bituminous materials, other than crude) (respectively, "2709 Products" and "2710 Products"), prohibiting the following:

• the supply or delivery by ship of 2709 Products from Russia to a third country or from one third country to another on or after 5 December 2022;
• the supply or delivery by ship of 2710 Products from Russia to a third country or from one third country to another on or after 5 February 2023;
• the provision of financial services or funds in pursuance of or in connection with an arrangement whose object or effect is such supply or delivery (with the same relevant dates as above for 2709 and 2710 Products); and
• the provision of brokering services in relation to any such arrangements (with the same relevant dates as above for 2709 and 2710 products).

These restrictions are subject to exemptions in respect of: (i) 2709 and 2710 Products which: (a) originate in a country that is not Russia, (b) are not owned by a person connected with Russia, and (c) are only being loaded in, departing from, or transiting through Russia; and (ii) acts dealing with an emergency. Licences may also be granted to authorise activity which would otherwise contravene these new restrictions. In particular, the Explanatory Memorandum to the No. 16 Regulations provides that a general licence ("GL") will be introduced to allow a price cap exception, such that the supply or delivery by ship of 2709 and 2710 Products will be available to third country importers, so long as they purchase oil below an agreed price. This is in line with previous commitments made by the G7 to introduce a price cap on Russian oil (see also our previous blogposts here and here).  The Explanatory Memorandum also states that "further licences will be introduced in certain circumstances to permit supply or delivery by ship of [2709 and 2710 Products] and related services in respect of specific activities critical to energy security".

The No. 16 Regulations also bring forward the date on which restrictions on the import of Russian oil and other related services (as set out in Chapter 4I of the Russia Regulations, and as discussed in our previous blogpost) will come into force. These measures will now come into force on 5 December 2022 (as opposed to 31 December as originally drafted).

New GL

Also on 4 November, the Office of Financial Sanctions Implementation ("OFSI") published a new GL regarding transactions related to agricultural commodities: GL INT/2022/2349952.

This GL provides various exemptions from the asset freezing provisions in the Russia Regulations to permit a wide range of transactions involving agricultural commodities (food, fertiliser, seed, feed and reproductive materials for the production of food for animals – as further defined in the GL). Persons relying on the GL are required to provide written notice to OFSI and are subject to record-keeping requirements.

At the time of writing, the version of the GL available online stated that it would take effect from 4 November 2022 and did not contain an expiry date.