Russian Diesel Sanctions: New U.S. Relief Creates Opportunities, but Significant Risks Remain

Recent U.S. sanctions relief may open the door to transactions involving Russian diesel fuel, but overlapping legal restrictions, international sanctions, and political uncertainty continue to pose substantial risks for energy traders and financial institutions.

Ongoing conflicts in Ukraine and the Middle East have created an increasingly complex sanctions environment for companies operating in global energy markets. Recent actions by the Trump Administration concerning Russian oil exports have introduced additional uncertainty, prompting questions about whether Russian-origin diesel can now be lawfully traded.

Following the Office of Foreign Assets Control’s (OFAC) issuance of General License No. 135 and President Trump’s exercise of sanctions waiver authority under the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, market participants are evaluating potential opportunities involving Russian diesel.

While these developments may authorize certain previously prohibited transactions, significant legal and commercial risks remain.

U.S. Sanctions Relief Has Important Limitations

General License 135 authorizes certain transactions involving the sale, delivery, offloading, or importation of Russian-origin diesel that would otherwise be prohibited under the Russian Harmful Foreign Activities Sanctions Regulations or the Ukraine-/Russia-related sanctions regulations.

However, the license does not necessarily override restrictions imposed under separate statutory authorities, including the Ending Importation of Russian Oil Act. That legislation imposes procedural requirements on terminating applicable restrictions, including congressional notification and an opportunity for congressional disapproval.

Absent compliance with those requirements or the exercise of other valid legal authority, statutory restrictions may remain in effect notwithstanding OFAC’s general license.

Authorization under one sanctions regime does not necessarily make a transaction lawful under all applicable U.S. laws.

International Sanctions Continue to Complicate Transactions

Even where transactions are permissible under U.S. law, extensive sanctions maintained by the European Union, United Kingdom, and other jurisdictions continue to restrict Russian energy trade.

Energy transactions frequently involve international banks, insurers, shipping companies, ports, and intermediaries, each potentially subject to different sanctions requirements. General License 135 does not alter these foreign restrictions, and there is little indication that key U.S. allies intend to broadly relax their sanctions on Russian energy.

Consequently, transactions authorized under U.S. sanctions may remain prohibited or commercially impractical elsewhere. Companies must evaluate the entire transaction chain, including financing, transportation, insurance, and payment processing.

Political Uncertainty Creates Additional Commercial Risk

The Administration’s efforts to facilitate Russian energy transactions have reportedly encountered bipartisan congressional opposition. Critics argue that relaxing import restrictions will provide limited relief to U.S. consumers while generating additional revenue for Russia’s military operations in Ukraine.

Lawmakers have also reportedly warned financial institutions, port authorities, and fuel distributors about the risks of facilitating Russian diesel imports.

This opposition raises the possibility of further legislative action or an abrupt reversal of current sanctions policies. Companies entering contracts, chartering vessels, or arranging financing in reliance on temporary relief could face significant losses if transactions must be suspended or unwound.

The critical question is not simply whether a transaction is lawful today, but whether it can be completed if the regulatory environment changes tomorrow.

Key Considerations for Market Participants

Before entering transactions involving Russian-origin diesel, companies should carefully assess:

• U.S. legal restrictions: Whether all applicable statutory and regulatory requirements permit the transaction.
• International sanctions: Exposure under EU, UK, and other foreign sanctions regimes.
• Counterparty diligence: Sanctions risks involving sellers, purchasers, vessels, insurers, banks, and intermediaries.
• Contractual protections: Termination rights, changes-in-law provisions, and safeguards against sudden regulatory changes.
• Enforcement exposure: Potential consequences of future sanctions changes, congressional action, or regulatory scrutiny.

The Bottom Line

High diesel prices and recent U.S. sanctions relief may create attractive commercial opportunities involving Russian-origin fuel. But the easing of certain sanctions does not eliminate the substantial legal, financial, and reputational risks associated with these transactions.

Companies considering entering or reentering this market should conduct thorough legal due diligence and ensure appropriate contractual protections before committing to transactions.

Our White Collar Defense, Government Investigations, and Economic Sanctions team advises companies, financial institutions, and commodity traders on complex sanctions compliance, cross-border transactions, and enforcement risks. We help clients navigate rapidly changing regulatory environments while protecting their commercial interests.