UK waters down new Russian oil sanctions amid fuel price rise

But the Prime Minister has denied that he is lifting sanctions “in any way whatsoever” and said that the “strong new package” announced on Wednesday will go “well beyond” existing measures.

The UK government also scrapped a planned rise in fuel duty because of rising pump prices.

A trade licence which allows for the import of jet fuel and diesel refined in third countries amid surging costs due to the Iran war came into effect on Wednesday.

Conservative leader Kemi Badenoch said it is “insane” to water down sanctions when the UK government is refusing to fully exploit North Sea resources.

A trade licence permits the imports “indefinitely”.

At Prime Minister’s Questions, Mrs Badenoch accused the government of having “snuck out an announcement that it was removing sanctions on Russian oil”.

She also said Sir Keir “is now choosing to buy dirty Russian oil, that money will be used to fund the killing of Ukrainian soldiers”, adding: “Isn’t he ashamed?”

However, Sir Keir claimed she “hadn’t done her homework”.

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Sir Keir said: “Let me address the sanctions head-on, because we have been united across this House on these issues since the beginning of the conflict.

“What we announced yesterday was a strong new package of new sanctions going well beyond existing sanctions, so it is a new package. This includes new bans on maritime services on LNG and new bans on refined oil products from Russia.

“We also issued two targeted short-term licences to phase the new sanctions in and to protect UK consumers. That is standard practice.

“This Government has phased in sanctions in this way before and the last government used exactly the same technique when they introduced sanctions. And when they did so, we supported them, because we could see the sanctions were the right thing to do to bear down on Russia.

“So, these are new sanctions being phased in. This is not a question of lifting existing sanctions in any way whatsoever, and we will continue to work with our allies on further sanction packages.”

He later added that to “misunderstand and misrepresent what is happening, this is a very serious issue”.

The Prime Minister continued: “Other countries do exactly the same, the EU has its own way of doing it. Australia and Canada have their own way of doing it.”

According to the licence the sanctions carve-out will be periodically reviewed as fuel prices rise due to the closure of the Strait of Hormuz and the ongoing crisis in the Middle East.

Mrs Badenoch said: “The fact is more people are buying Russian oil because British oil isn’t being drilled.

“He’s sanctioning British oil but not Russian oil, and he should be ashamed.

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“I cannot believe that this Prime Minister, even when he has nothing to lose, continues to defend banning new British oil and gas licences.”

She added: “Can he tell us why is he doing everything to save his job and doing nothing to save other people’s jobs?”

Sir Keir replied: “We are supporting those existing oil and gas fields throughout their lifespan. We made changes in November to allow neighbouring fields to be exploited.

“But it is because we are on the international market that our prices on businesses and households go up every time there’s an international conflict.”

Sir Keir also told MPs the 5p per litre fuel duty cut introduced by the Conservative government in March 2022 would be extended for the rest of the year.

That means the rate will remain nearly 53p per litre.

Rates were previously planned to increase by 1p per litre on September 1, with a pair of 2p per litre rises on December 1 this year and March 1 next year.

Iran’s restrictions on tankers passing through the Strait of Hormuz means the average price of a litre of petrol and diesel at UK forecourts is 26p and 44p respectively more expensive than before the conflict started on February 28.

Steve Gooding, director of motoring research charity the RAC Foundation, said: “Although today’s news on fuel duty won’t have the immediate effect of bringing forecourt prices down, at least it shows that ministers have registered the financial pain caused by rampant pump prices for individuals and for business.

“Since the start of the Iran conflict, drivers have already paid a war premium of a staggering £3 billion in inflated fuel prices, half-a-billion of which has gone to the Exchequer in VAT receipts.”

Jack Cousens, head of roads policy at the AA, said the announcement “gives an opportunity for the Government’s Fuel Finder scheme to show its value, by showing drivers where to find the best prices”.

Sir Keir also announced that hauliers would benefit from a “12-month road tax holiday”.

The Treasury said they would pay £1 at their annual renewal, saving £600 for a typical heavy lorry and £912 for the biggest vehicles on the road.

The RAC said on Tuesday that the average price of a litre of petrol at UK forecourts was 158.5p, which was the most expensive level since December 2022.

It warned that wholesale costs mean pump prices are likely to reach at least 160p per litre in the coming weeks.

Farmer, rail freight and other users of red diesel will see their fuel duty cut as part of an effort to reduce costs of goods.

The rate will be cut from 10.18p to 6.48p per litre from June 15 until the end of the year.

Downing Street indicated the package of measures will cost £455 million.