U.S. Sanctions against Russia: New Legislation, Waivers and Russian Diesel Imports

U.S. Sanctions against Russia: New Legislation, Waivers and Russian Diesel Imports

There have been a number of significant developments in U.S. sanctions against Russia in recent weeks, including new legislation targeting Russian energy trade alongside measures permitting certain Russian diesel transactions. This update considers the key developments and their potential implications for Members.

Russian Diesel Imports

On 9th October, 2026, OFAC issued General License 135 (“GL 135”), temporarily authorising transactions relating to the sale, delivery, offloading or importation, including into the U.S., of Russian-origin diesel fuel that would otherwise be prohibited under the Russian Harmful Foreign Activities Sanctions Regulations or the Ukraine-/Russia-Related Sanctions Regulations. The authorisation remains in effect until 7th April, 2027.

The licence does not authorise debits to accounts on the books of U.S. financial institutions of the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, or the Russian Ministry of Finance.

As GL 135 authorises transactions otherwise prohibited under the two specified Russia related sanctions programmes, it may permit transactions involving persons or ships designated under those authorities. However, it does not override prohibitions arising under other U.S. sanctions programmes. Accordingly, for example, where a ship is designated under both a relevant Russia related authority and an Iranian sanctions programme, GL 135 would not authorise a transaction that remains prohibited under the Iranian sanctions programme.

It is important to note that the EU and UK sanctions regimes continue to prohibit the provision of maritime transport and associated services, including insurance, in relation to Russian-origin diesel, unless the transaction falls within the applicable oil price cap exception. As diesel is classified as a "premium-to-crude" petroleum product, the exception generally applies only where the purchase price does not exceed the applicable price cap, currently USD 100 per barrel. Moreover, the sanctioning of numerous shadow fleet ships by the EU and UK remain in place.

There is, however, some legal uncertainty regarding the status of imports of Russian diesel into the U.S. The U.S.’s “Ending Importation of Russian Oil Act of 2022” separately prohibited the importation of Russian-origin energy products, including diesel, and questions have been raised as to whether GL 135 can authorise imports notwithstanding that statutory prohibition. GL 135 has consequently generated political controversy in the U.S., with members of Congress challenging its legality and seeking to revoke the licence and prevent imports of Russian diesel.

The Lindsey O. Graham Sanctioning Russia and Iran Act of 2026

The Lindsey O. Graham Sanctioning Russia and Iran Act of 2026 (the “Act”), enacted on 18th September, 2026, codifies and expands aspects of the existing U.S. sanctions framework against Russia and introduces new sanctions and tariff authorities, including measures of particular relevance to ships and maritime operators involved in Russian energy trades. The Act also extends the Iran Sanctions Act of 1996 for five years, through to 2031.

However, on 16th October, 2026, the President waived the relevant new Russia related sanctions under the Act on U.S. national interest grounds. The waiver means these new measures are not presently being applied. The underlying legislation nevertheless remains in place and the waived measures could become applicable if the waiver is withdrawn or modified.

Importantly, the waiver does not affect the existing U.S. sanctions regimes relating to Russia, which remain in force. Existing OFAC licences also continue to operate in accordance with their terms, including GL 135.

The Act’s shipping provisions

Section 102 of the Act contains new designation criteria relevant to shipowners and charterers. It requires the President, within 30 days of enactment and at 180-day intervals thereafter, to review persons and ships falling within specified criteria under the Act. Persons meeting the relevant criteria may be subject to blocking and visa sanctions, while ships meeting the relevant criteria may be designated as blocked property.

The criteria overlap in some respects with conduct already capable of attracting sanctions under existing U.S. measures, but extend to a potentially broader range of non-U.S. persons and ships involved in the trade and transportation of Russian-origin energy commodities. They include ships determined to be:

• used to circumvent U.S. or other sanctions;
• engaging in unsafe or non-standard maritime practices in furtherance of covered Russian energy trades;
• operating without adequate maritime insurance;
• evading applicable Russian oil price-cap requirements;
• knowingly transporting specified Russian origin oil, natural gas, LNG, petroleum or petrochemical products, coal and other energy products such as uranium; or
• engaging in certain ship-to-ship transfers involving sanctioned ships.

The Act also permits certain sanctions imposed on a ship by the UK, EU, G7 or a member of the Five Eyes intelligence alliance to be treated as prima facie evidence that the ship or a relevant person has engaged in sanctionable conduct.

Tarriff measures

The Act provides for additional duties of up to 500% ad valorem on goods imported into the United States from Russia and additional duties of up to 100% on goods imported from certain major purchasers of Russian crude oil or natural gas and countries facilitating Russian oil sanctions evasion, subject to the exceptions in section 114 of the Act (set out below).

Maritime sanctions exposure

The potential sanctions exposure under the Act is not limited to the ship itself. Section 102 of the Act also provides for sanctions against certain foreign persons connected with affected ships, including owners, operators, managers, insurers, reinsurers, captains and senior crew, depending on the circumstances. As such, the Act broadens the potential sanctions exposure of certain non-U.S. persons involved in Russian energy-related activities.

There remains uncertainty over how broadly some of these provisions will be interpreted, particularly the language concerning a person who knowingly transfers a ship to Russia or “provides for the use of” a ship by a Russian person. The practical scope of this wording will be important if the sanctions are brought into effect.

Exceptions and OFAC licences

Section 114 of the Act contains several notable exceptions, including:

• qualifying humanitarian trade, including food, agricultural commodities and medicines;
• non-Russian oil transiting Russia, provided the oil originates outside Russia;
• certain wind-down and divestment activities during a 270-day period;
• supplies required for crew safety, protection of human life or prevention of environmental damage; and
• transactions permitted under applicable OFAC general licences.

These are targeted exceptions and should not be treated as general permission to undertake otherwise sanctionable business.

Summary

The Act’s relevant new sanctions and tariff measures are currently subject to a Presidential waiver and are therefore not presently being applied. If the waiver is withdrawn or modified, however, the Act's expanded designation criteria and other sanctions provisions could become applicable, with potentially significant consequences for ships and maritime businesses involved in Russian energy trades.

The Presidential waiver should not, however, be viewed as a general relaxation of U.S. sanctions against Russia. The pre-existing U.S. sanctions framework remains in force, and owners should continue to consider existing prohibitions and designations, as well as the terms and limitations of any applicable OFAC licence.

Importantly, the UK, EU and U.S. sanctions regimes operate separately, meaning that a trade permitted under one regime may nevertheless be prohibited under another. Members should therefore continue to consider the application of each relevant sanctions regime to their trade.

The Club will continue to monitor developments and provide further updates as appropriate. Members with any queries are encouraged to contact the Club.