In a major policy shift, the British government decided this week to lift sanctions on Russian energy products, in two ways.<\/p>\n
First, a general trade license was issued allowing for the import of diesel and jet fuel from Russian oil that has been processed in third countries like India and Turkey. A second license<\/a> provides for the importation of Russian liquefied natural gas from two terminals, Sakhalin 2, which supplies gas to Asia, and Yamal, which supplies gas to Europe<\/a>.<\/p>\n U.K. mainstream media<\/a> and opposition political parties have reacted furiously to this sanctions relief move as a concession to “dirty Russian oil<\/a>“. A Ukrainian member of parliament<\/a> pointed out that Keir Starmer made a commitment to Ukrainian President Volodymyr Zelensky not to remove sanctions against Russia<\/a>. The Daily Telegraph labelled the Prime Minister “comrade Keir<\/a>” on the basis that he was making concessions to the \u201cSoviets,\u201d more than three decades after the Soviet Union collapsed. Such is the febrile nature of political discussion of Russia in the United Kingdom. <\/p>\n Prime Minister Keir Starmer<\/a> justified his move as a response to rising energy prices and reiterated his longer-term plan to tighten sanctions against Russia. On May 19, the same day the United Kingdom\u2019s measure came into force, U.S. Treasury Secretary Bessent<\/a> issued a 30-day extension to a license lifting any restriction on the export of Russian oil. It is hard to imagine that the timing of both the U.K. and U.S. measures was a coincidence. <\/p>\n Indeed, it is a sign that the U.K. is coming further into line with the U.S. on lifting energy restrictions to ease global supply concerns. In March, the U.S. Treasury also issued a general license<\/a> which remains in force, to provide for the temporary lifting of sanctions on Iranian oil<\/a>. <\/p>\n Under fire from the U.K. press, the government has insisted<\/a> that this is a short-term measure. But there is reason to believe it could endure for a while. <\/p>\n The jet fuel and diesel license clearly states that it is of indefinite duration<\/a> and that the license will be reviewed periodically. The idea of a periodic review might pacify potential critics although the statement is meaningless: with over three thousand UK sanctions against Russia there is no system in place for this and I know of no examples of the U.K. reviewing then repealing a Russia sanction unless subject to legal challenge. So, the move on diesel and jet fuel appears to represent a permanent lifting of sanctions on key products for the U.K. economy. There is an obvious reason for this. <\/p>\n The U.K. imports almost 70% of its jet fuel<\/a> and 40% of its diesel<\/a>. Lifting restrictions on plentiful Russian oil that is processed into diesel and jet fuel is an economically rational policy choice and therefore a sensible thing to do.<\/p>\n We have already seen flights being cancelled<\/a> in the U.K. as fears about a jet fuel crisis mount. Russia<\/a> is benefiting from an energy revenue windfall from the stand-off over Iran<\/a> irrespective of any restrictive measures imposed by the West. Maintaining sanctions on Russian energy merely has a boomerang effect on the countries imposing those sanctions, including Britain itself. <\/p>\n There is no sign yet that the EU<\/a> plans to follow the US and the UK in lifting restrictions on diesel and jet fuel There certainly appears to be less concern in Europe<\/a> about a possible crisis in air travel.<\/p>\n While the UK measure to ease restrictions on diesel and jet fuel shows a commendable realism, its motive for softening sanctions on LNG are less directly related to core UK interests. Britain hasn\u2019t imported any Russian LNG<\/a> since the start of the war in Ukraine and even before the war started, imported negligible volumes of Russian gas. <\/p>\n Rather, and at least in part, the LNG exemption is intended to remain in line with the European Union at a time when Keir Starmer<\/a> has been pushing the idea of the U.K. deepening economic ties with Europe. Three-quarters of the LNG from the Yamal field \u2014 one of the two covered by the UK licence \u2014 goes to European customers, accounting for 7.2 billion Euros in 2025 alone. <\/p>\n While the EU has recently banned short-term purchases on the spot market, which had been subject to heavy profiteering, long-term contracts remain unsanctioned<\/a> through to January 1, 2027. This is precisely when the U.K. license also expires, bringing the UK and the EU fully in lockstep. The license also indicates that the Minister may \u201c\u2018vary, revoke or suspend\u201d\u2019 the license at any time, allowing flexibility should the EU policy change.<\/p>\n Britain\u2019s temporary decision to lift the ban on LNG exports from Sakhalin 2 is more tangential to UK interests. That terminal is located in Asia, with most of its LNG going to Japan<\/a>, China<\/a> and South Korea, which are suffering a major energy shock from the war against Iran. Amid high global energy prices, the U.K. move appears to be driven by a mix of rational considerations and support for allied nations in both Europe and in Asia.<\/p>\n In a further attempt to spin the sanctions relief package, the UK government updated its Russia sanctions\u2019 regulations claiming that this was a move to act tougher on Russia, while opening the door to diesel and jet fuel. The updated regulations tightened restrictions on everything from uranium imports to ship servicing contracts (including ships that transport LNG). <\/p>\n