The outbreak of the conflict in the Middle East in March 2026 has created significant uncertainty for organisations operating across international markets, not least arising out of rapidly evolving and sometimes contradicting sanctions regimes.
Since Russia’s full-scale invasion of Ukraine in February 2022, sanctions imposed by the UK, EU and US have targeted thousands of Russian individuals and companies, and hundreds of tankers in the "shadow fleet" it relies on to move crude around the world. Despite shared strategic objectives, the UK, EU, and US sanctions regimes sometimes diverge in several key areas. The current oil supply crisis has highlighted a clear divergence of approach.
Just over a fortnight ago, the UK Government announced nearly 300 new sanctions as the UK again cracked down on critical Russian energy revenues, including oil exports. Foreign Secretary Yvette Cooper announced at the time that this action had been taken to “disrupt the critical financing…..and revenue streams that sustain Russia’s aggression.” It was announced by the UK Government that Russian oil revenues were at their lowest since 2020.
As a result of global sanctions, India and China have become the biggest customers for Russian crude oil. US sanctions, in particular, have been aimed at pressuring India to stop buying Russian oil. When President Trump and Indian Prime Minister Narendra Modi announced a trade agreement last month, a major component of the deal was India agreeing to stop purchasing Russian oil.
However, since then the US and Israel’s war with Iran has driven up the price of oil. Around a fifth of the world's oil usually passes through the Strait of Hormuz. Oil tankers stranded in the gulf, unable to traverse the narrow channel between Iran and Oman, has led to a growing supply crisis. Russia has moved quickly to fill the gap. Deputy Prime Minister Alexander Novak has publicly declared that Russia is ready to boost oil supplies to China and India amid Hormuz disruptions.
What does this mean for Russian sanctions?
French President Emmanuel Macron has said that the current situation in the Strait of Hormuz "in no way" justified lifting the sanctions on Russia. Likewise, there is no indication at present that the UK Government intends to lift sanctions. However, the US appears to be taking a different approach.
Last week, OFAC introduced a temporary 30-day licence to allow Indian refiners to purchase Russian oil without any tariff repercussions. The measure was described as a short-term stopgap and applied only to cargoes already at sea, supposedly meaning that the move would not significantly boost revenue for Moscow. Today, OFAC introduced a Russia-related licence on other countries buying Russian oil and petroleum already loaded on vessels at sea in a further attempt to curb the economic impact of the conflict in the Middle East. Unsurprisingly, this general licence does not permit any transaction or activity involving Iran, the Government of Iran, or Iranian origin goods or services.
It is clear that the longer the conflict in the Middle East goes on, the more Russia is likely to profit, further strengthening Russia’s ability to fund its military campaign against Ukraine. Russia has reportedly received €6bn (£5bn) from selling its fossil fuels in the fortnight since the start of the US-Israel war with Iran, according to data by the Centre for Research on Energy and Clean Air (as reported in the Guardian).
It is not yet clear what the longer-term impact will be on the approach taken by the UK, EU or US to Russian sanctions and crude oil.
However, it is clear that when jurisdictions take different approaches, as we are seeing currently in response to the war in the Middle East, organisations face complex decisions around screening policy, risk tolerance, and legal exposure.
