UK targets Azerbaijan-linked traders, tankers in Victory Day sanctions rampup

The UK on May 9 sanctioned five Azeri nationals allegedly linked to a Singapore and UAE-based oil trading company working in support of Russia's already heavily sanctioned energy sector, and also sanctioned over 100 more oil tankers it described as part of the "decrepit and dangerous" Russian shadow fleet.

The Azeri nationals are all linked to a trading entity known as Coral Energy or 2Rivers Energy, against which the UK already announced sanctions on Dec. 17, aiming to crack down on Russian sanctions avoidance.

2Rivers "has been involved in obtaining a benefit from or supporting the government of Russia, namely the Russian energy sector," the UK Treasury's Office of Financial Sanctions Implementation said Dec. 17.

Coral Energy previously asserted it had cut all ties with Russia, saying in a PR Newswire statement from Oct. 30 that it had made a "clear and documented exit from the Russian market, which included terminating all Russian-sourced contracts and asset disposals associated with Russian trading." The same statement said two of the individuals named by the UK on May 9, Etibar Eyyub and Tahir Garayev, had cut ties with Coral Energy. And it said its naphtha trading had been in compliance with sanctions price caps.

Two Hong Kong-linked energy companies, BX Energy and Nord Axis, were also sanctioned. Bellatrix Energy, likely linked to BX Energy, also became a target of US sanctions in December 2023.

Subsea threats

Prime Minister Keir Starmer also unveiled a major expansion of the list of sanctioned Russian "shadow fleet" tankers at a May 9 meeting in Oslo of the Joint Expeditionary Force, which combines 10 north European NATO countries led by the UK and aims to counter regional security threats, particularly to infrastructure such as cables and pipelines.

The UK actions symbolically coincided with Russia's World War II Victory Day commemorations, a centerpiece of the Russian political calendar that showcases the country's present-day military capability.

The shadow fleet comprises tankers accumulated by Moscow and associated interests in recent years, often used to maintain Russia's oil sales in circumvention of Western sanctions and the G7 price cap.

In the latest sanctions enforcement, a total of 101 ships with 8.76 million dwt were added to the UK blacklist, of which 55 were product tankers while almost all others were designed to transport crude and fuel oil.

Past Western sanctions tended to focus on crude tankers.

S&P Global Commodities at Sea data shows those ships have shipped 176 million barrels of Russian crude and 85.8 million barrels of petroleum products, most of which gasoil, over the past year.

The shipping sanctions follow a series of incidents in which European subsea infrastructure, including pipelines and cables, has been damaged, amid claims of Russian involvement.

"Reckless actions of the [Russian shadow] fleet pose [a] costly threat to UK and Euro-Atlantic critical national infrastructure and the environment," Starmer's office said in a statement, arguing that Russia's economy is "reeling thanks to lower oil prices and the high costs of the war" in Ukraine.

The Oslo meeting is expected to focus on "protecting subsea infrastructure from malicious and careless incidents" after the group in January announced a "reaction system" known as Nordic Warden, intended to monitor Russian shipping and track potential threats.

Recent suspicious incidents have included repeated damage to the C-Lion data cable, which connects Finland and Germany, as well as damage to the EstLink-2 Baltic electricity cable, and to the Balticconnector gas pipeline between Estonia and Finland in October 2023.