With some markets flouting Western rules, impact is questioned
A huge ramp-up in sanctions since the 2022 invasion of Ukraine has created a complex bureaucracy, dividing trading relationships into those inside and outside the Western system.At the FT Live Commodities Summit in Lausanne, a panel examined their impact on commodity flows.
Claire O'Neill McCleskey, co-founder, Clarity Compliance Consulting said development of Russian oil price cap was a significant step.The US Department of the Treasury's Office of Foreign Assets Control implements a $60 per barrel price cap on Russian-origin seaborne crude oil, effective December 5, 2022, as part of a G7+ coalition, to restrict Russian revenue while keeping markets supplied.But the industry warned then of a growth of an uninsured "shadow fleet", and that has been borne out, she said.Key markets openly flout restrictions on Russian and Iranian commodities and some say the rules are not clear enough in some regions.Although the Trump administration has not used sanctions in the same way, it is notable that it has not removed the 2022 restrictions in areas such as architecture and engineering, O'Neill McCleskey said."Sanctions compliance still takes a lot of resources for people," she said.Florence Schurch, secretary general, SUISSENEGOCE, said Switzerland had sought to "copy and paste" EU sanctions rather than overcomplicate the existing landscape by creating its own.For a neutral country, this was a big step, she said.Clarity and opacityJames Willn, partner at Reed Smith based out of the UAE, said he warned clients there were different ways different regulatory bodies, such as OFAC, approached sanctions.Enforcement issues and D-listing processes showed the biggest variation, he said.Nabeel Ebrahim, chief revenue officer at Behavox said it was "humanly impossible" to check 17,000 names of sanctioned individuals on a daily basis.It gets further muddied when organisations operate in various regions and across many currencies, he said.While technology can help, it also exposes these gaps, he said."Organisations want to demonstrate the right posture to Western authorities," he said."There are various degrees of state enforcement, and they don't all go in with the nuclear option of an asset freeze," said Abigail Healey, partner at Quillon Law."They might look at fines before an asset freeze."But he process for getting off the list as a designated person was "opaque" in the UK, Healey said."People are being designated on very little evidence," she said.In contrast, the EU process was more transparent, according to Willn, with more precedent and more clarity over its d-listing process.At OFAC, dialogue is always possible, he said.However, the UK system appeared to work as an indefinite sentence, with designated individuals unable to understand clearly how to challenge that status, Willn said.Willn said there was a tendency to go for easy targets rather than keystones in the regions individual states are targeting.But the panel acknowledged there were few alternatives."We cannot let a country invade another one without reacting as part of the international community, and sanctions are one of the tools," Schurch said.It was a way of retaliating through the economy rather than through war, even if it was not perfect, she said.
Russia OFAC Commodity Trading FT Live Commodities Summit 2026
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