The 2026 Amendment to UK Russia Sanctions: Closing Loopholes While Introducing Licensed Flexibility?

Can a Government balance sanctions with its own economic interests?

On 20 May 2026, the UK Government introduced a significant (although you might think rather belated) update to its Russia sanctions regime through the Russia (Sanctions) (EU Exit) (Amendment) Regulations 2026 (SI 2026/543).  Very similar sanctions were introduced by the EU back in January (having been announced 6 months earlier to allow the refineries time to prepare), so the UK is a bit behind the curve.

This instrument yet again amends the long‑standing Russia (Sanctions) (EU Exit) Regulations 2019 which essentially is the backbone of the sanctions regime relating to Russia. As you may expect this was heavily amended in the weeks and months following the Russian invasion of Ukraine but has now been tinkered with around 30 times since 2020.

This new range of sanctions is specifically aimed at Russian crude oil which has then been refined in a “Third Country” – ie somewhere other than Russia or the UK. Examples of countries which may legally take in Russian crude oil would include India, China and Turkey. Previously these countries would import Russian crude and refine it into consumable products such as jet fuel and diesel and then supply it into the EU and the UK. Although derived from Russian crude, these products would be exported as “Indian-origin” and so outside of the scope of the original sanctions regime.

During that initial period of sanctions on crude, Russia was offering substantial discounts on the international benchmark price. Those third countries were therefore enticed to take in this crude and sell it on after being refined.

It is this (rather significant) ‘loophole’ which has now effectively been closed by the EU and UK. To do this, the amendment introduced a new prohibition on the import of refined oil products produced in third countries from Russian-origin crude oil. This measure was formalised through provisions such as Regulation 46Z9F, inserted into the 2019 Regulations by the 2026 amendment.

This is indeed a significant shift and will no doubt have a huge impact on finance flowing back into Russia given that The Centre for Research on Energy and Clean Air (CREA) estimates that somewhere around £1.8bn worth of oil products made from Russian crude had been imported to the UK via these third countries in the last 4 years.

However Russian crude oil has been making its way around the globe via it’s “shadow fleet” – clandestine ships registered in different jurisdictions carrying goods which are different to their manifest or where their data tracking systems have been disabled.

This move (although late) will strengthen existing trade restrictions and the intention behind this provision is clear – to prevent Russian oil from entering the UK market “through the back door” and thereby reduce revenue streams supporting the Russian state.

However, the amendments will also simultaneously provide limited flexibility through a licensing mechanism. The amendment reflects the UK’s ongoing effort to tighten economic pressure on Russia following its invasion of Ukraine, while also managing domestic and global energy concerns.

Introduction of General Trade Licences 

Despite tightening restrictions as set out above, the UK government simultaneously introduced General Trade Licences—issued by the Office of Trade Sanctions Implementation (OTSI). General trade licence permit certain activities which would otherwise be prohibited by the sanctions regime.

These licences allow (under strict conditions), the continued importation of refined petroleum products such as diesel and jet fuel derived from Russian crude in third countries. This therefore represents a carefully targeted exception to the new prohibition.

Importantly, the licensing framework does not remove the underlying ban. Instead, it creates a legal mechanism through which businesses can rely on an authorisation without applying for individual approval, provided they comply with licence conditions.

UK officials have emphasised that this approach allows sanctions to remain robust while mitigating unintended consequences.

So how can we justify trying to enhance the ban on using Russian crude oil but then allow Russian originating products such as jet fuel and diesel to enter the country?

Policy Rationale: Balancing Pressure and Energy Security 

The dual approach adopted in the 2026 amendment highlights the UK government’s challenge in balancing geopolitical objectives with economic stability. On one hand, closing the third-country processing loophole strengthens sanctions integrity by ensuring that Russian crude oil cannot indirectly access the UK market. On the other, the issuance of licences acknowledges the realities of global energy markets.

Some may consider the timing of the new amendments to be notable and opportunistic when global fuel prices are rising and there is a fear of jet fuel running short in the near future as a result of the US war with Iran.

Legal and Compliance Implications 

For businesses, the amendment significantly increases compliance obligations. Companies must now carefully assess not only the origin of imported petroleum products but also the origin of the crude oil used in their production. This may require enhanced due diligence, contractual assurances, and supply chain transparency.

At the same time, firms may rely on General Trade Licences where applicable—but only within their precise scope. Misinterpretation or misuse of licences could expose companies to enforcement actions under UK sanctions law.

Conclusion 

The 2026 amendment to the UK Russia sanctions regime represents a sophisticated evolution of trade restrictions. By closing a major loophole while allowing narrowly defined licensed exemptions, the UK has reinforced the effectiveness of its sanctions without disregarding economic realities.

This dual-track approach illustrates how modern sanctions policy increasingly blends strict prohibitions with calibrated flexibility to achieve both political and practical objectives.

It remains to be seen how effective this new policy may be and whether the general trade licences will continue if the Middle Eastern trade routes re-open to ease the global fuel crisis.

Contact John Hartley, Head of Regulatory and Business Crime, via john.hartley@primaslaw.co.uk.