Sanctions in Commodity Trade: Overview

Overview

International sanctions are restrictions imposed by governments and international bodies on transactions with specific individuals, entities, vessels, sectors or countries. In international commodity trade, sanctions are a fundamental compliance consideration — because commodities frequently originate from, transit through, or are destined for jurisdictions subject to sanctions regimes.

Non-compliance with sanctions carries severe legal consequences, including criminal prosecution, civil penalties, and reputational damage. It also carries the practical risk of being cut off from the banking system if correspondent banks identify sanctions-related transactions.

Key sanctions authorities

The principal sanctions authorities relevant to commodity trade are:

• OFAC (US Treasury, Office of Foreign Assets Control): Issues and administers US sanctions programmes. US dollar transactions and US-linked parties are subject to OFAC jurisdiction regardless of where the transaction occurs. OFAC's Specially Designated Nationals (SDN) list is the primary reference.
• EU Council: Issues EU sanctions programmes. EU-person nexus creates extraterritorial effect. Consolidated list maintained by the European External Action Service.
• UK OFSI (Office of Financial Sanctions Implementation): Administers UK sanctions following UK's independent post-Brexit sanctions framework. UK financial sanctions consolidated list.
• UN Security Council: Issues UN-mandated sanctions implemented by member states. UN Consolidated List maintained by the UN Sanctions Committee.

Commodity-relevant sanctions programmes

Several current sanctions programmes have direct relevance to commodity trade. The following is illustrative, not exhaustive, and may not reflect the most current position:

• Russian oil price cap: G7/EU/US/UK/Australia coalition maintains a price cap on Russian-origin crude oil and petroleum products. Shipping, insurance, and finance providers are restricted from servicing Russian oil above the cap price.
• Iran: Comprehensive US secondary sanctions on Iranian oil, petrochemicals, and metals. EU and UN sanctions also apply. Transactions involving Iranian-origin energy or metals carry significant risk.
• Venezuela: US sectoral sanctions on Venezuelan oil sector. OFAC CAATSA designations of PDVSA and related entities.
• North Korea: UN, US, EU, and UK comprehensive commodity sanctions. Vessel deceptive shipping practices are a documented evasion mechanism.
• Sudan, South Sudan, and various African jurisdictions: Varying regimes from different authorities. Requires case-by-case review.

This list is illustrative only and is not a compliance tool. Traders must conduct their own up-to-date review using primary authoritative sources before entering any transaction.

Compliance basics for commodity traders

At a minimum, commodity traders should maintain:

• Counterparty screening against the principal sanctions lists at the point of engagement and on an ongoing basis
• Vessel screening (name, IMO number, flag state, ownership chain) for shipping-related transactions
• Origin/destination screening for the commodity itself
• Escalation procedures for transactions that raise sanctions questions
• Recordkeeping sufficient to demonstrate a good-faith compliance effort

CRT's Foundation Certificate (Module 6) covers sanctions compliance fundamentals. The CRT Transaction Risk Check service (in development) includes a sanctions screening component.

Staying current

Sanctions regimes change frequently — new designations are added, programmes are extended or tightened, and new General Licences or derogations are issued. Traders should subscribe to update services from the relevant authorities and maintain an internal monitoring process.

CRT will publish timely sanctions update notices to members when the intelligence programme is operational. Register your interest through the Contact page to be informed when this service launches.