Iran War: Rethink of Russian fuel sanctions shelved as supply fears grow

Tuesday, 17 March 2026

The Government appears to have abandoned an attempt to close a giant loophole in the country’s Russian fuel sanctions regime, in the wake of the conflict in Iran.

Guidance issued by the Ministry of Foreign Affairs and Trade (Mfat) in October 2022 gives fuel companies including Z, BP and Mobil the green light to import fuel that has been refined from Russian oil, so long as it has been refined outside of Russia.

The guidance had been under review, but the ministry has now indicated it is content with the status quo.

The fuel sanctions regime came under the spotlight in November, when 1 News reported that Z Energy had imported an estimated $100 million-worth of fuel that had been refined in India from Russian crude between 2024 and 2025.

Read more:

• Work continues to close loophole letting Russian oil be refined abroad and enter NZ

• Winston Peters says drivers have right to know if petrol derived from Russian oil

• Z Energy won’t say if more shipments of refined Russian fuel en route to NZ

Foreign Minister Winston Peters said in the wake of that report that an “in-house inquiry” was under way on the sanctions regime, and his office subsequently confirmed Mfat was reviewing the rules.

He made clear a week before the joint United States and Israeli strikes on Iran that work on potentially tightening the sanctions regime was still under way, telling The Post officials were “considering options carefully”.

It is believed Peters had been hoping to follow the EU — and the stated intention of the UK — by banning the import of fuels that had been refined from Russian crude.

In December he said he believed drivers had a right to know if the fuel they bought was likely to have been derived from Russian oil, after Z Energy and the country’s four other bulk petrol importers refused or failed to answer the same question.

It is understood that when the former Labour government originally put the Russian sanctions regime in place in 2022, its Cabinet had been under the impression importers would use their best efforts to avoid such imports, despite Mfat’s entirely permissive guidance.

Peters declined an interview, but Mfat made clear in a statement on Saturday that the idea of tightening the sanctions regime was no longer being actively progressed.

“While we continue to monitor the situation, we’re confident our current settings remain appropriate,” it said.

Finance Minister Nicola Willis confirmed on Monday that fuel companies did not need permission from the Government to import fuels derived in third countries from Russian crude and appeared to accept such imports might become more likely in the wake of the conflict in Iran.

“As refineries are looking in more directions for crude oil, some of them that have previously simply relied on the Middle East may look more widely.

“There are a number of avenues that they may look to. One is the release of US strategic reserves. Another is the release of Japanese strategic reserves. It is also the case that some of them may look to Russian cargoes of oil, many of which are already on the water,” she said.