Syed Rahman outlines the measures.
The UK government has imposed sanctions on two of Russia’s biggest energy companies, Rosneft and Lukoil. It has also sanctioned four oil terminals in China, an Indian refinery said to have imported 100 million barrels of Russian crude oil last year, and 44 shadow fleet tankers accused of transporting Russian oil.
The two energy companies were said by the UK government to be supporting the Russian government by exporting 3.1 million barrels of oil per day. Seven specialised liquefied natural gas (LNG) tankers and an LNG terminal have also been sanctioned.
The package of 90 new sanctions was announced as Chancellor Rachel Reeves headed for Washington DC for the International Monetary Fund Annual Meetings, where she was to meet G7 finance ministers and representatives of other nations committed to helping Ukraine defend itself against Russia’s invasion.
The chancellor said the measures were expected to have a significant impact on Russia’s economy and Russian President Vladimir Putin’s ability to sustain military operations in Ukraine.
She added: “We are sending a clear signal: Russian oil is off the market. The UK will continue to strip away the funding that fuels his war machine. We will hold to account all those enabling his illegal invasion of Ukraine.”
These latest sanctions were announced as newly-released data showed that UK sanctions have frozen £28.7 billion of Russian assets since the February 2022 invasion of Ukraine.
Impact
While on paper, these latest measures are a significant blow to Russia, their impact will (as with all sanctions) unfold over time. These are not the first Russian energy companies to be sanctioned and that sector of Russian industry has already shifted its operations towards countries such as China and India. But these sanctions will reduce the options available to these companies and have the effect of further isolating the Russian market.
Many may question why these sanctions are being imposed now, rather than earlier. It is important to recognise that if companies are among the biggest in Russia, their geopolitical reach will be extensive. Many eastern European countries are dependent on Russian energy and their connections to it cannot simply be severed immediately. Other energy sources must be identified and acceptable arrangements put in place before this can be done, otherwise there is a risk those countries will make shadowy, unofficial deals with Russia. In addition, the long-term effect of sanctioning such global companies needs to be carefully assessed. These companies have the potential to reach out to other partners, and the effects of this on the energy market may only be felt in years to come.
There are thousands of areas where sanctions could be introduced with the intention of harming the Russian economy. As larger overall sanctions have been imposed, new sanctions can then be explored regarding smaller, more niche areas. To take one example, the US-based non-profit research organisation The Dekleptocracy Project has identified military vehicle lubricants as an area where sanctions could have a big effect. But identifying and implementing sanctions in such specialised areas would take much time and effort and could possibly be difficult to implement.
