3 July 2025

The United Kingdom’s recent decision to impose sanctions on Azerbaijani-affiliated, state-owned enterprises allegedly involved in facilitating Russia’s circumvention of international oil sanctions has once again brought into sharp relief the geopolitical sensitivities surrounding Azerbaijan’s energy sector. On May 9, 2025, the UK government sanctioned the Zangezur, an Aframax-class oil tanker owned by the Azerbaijan Caspian Shipping Closed Joint-Stock Company (ASCO)...

The Zangezur... has reportedly called at Russia’s Primorsk port—the country’s primary Baltic oil export terminal—11 times, while also making six calls to ports in the Eastern Mediterranean and Aegean Sea, notably Türkiye’s Nemrut Bay, home to the STAR Refinery, which is owned by Azerbaijan’s State Oil and Gas Company, SOCAR.

According to various media sources, all three Azerbaijani-flagged Aframax tankers— Karabakh, Shusha, and Zangezur—have been actively engaged in the transport of Russian crude oil from Primorsk to Nemrut Bay since November 2023. SOCAR confirmed that these vessels were acquired in 2023 through a joint venture with ASCO. Industry analysts and data from the London Stock Exchange Group suggest that Azerbaijani-linked entities have contributed to lowering logistical costs for Russian oil exports by offering transportation services amid increasingly stringent Western restrictions.

...This trajectory places Azerbaijan in a diplomatically delicate position: while it maintains its status as a strategic energy partner to Western states, it is concurrently perceived as a discreet enabler of Russia’s shadow oil trade...

The strategic partnership between Russia’s Lukoil and Azerbaijan’s State Oil Company (SOCAR) has significantly expanded the reach of Russian crude oil into European markets via Azerbaijan, while also creating new opportunities for Russian companies to participate in regional energy infrastructure projects. This collaboration enables Russian firms to capitalize on enhanced access to Europe by leveraging SOCAR’s extensive oil and gas infrastructure in both Azerbaijan and Türkiye...

This expansion enabled Türkiye to increase its energy imports from Russia, with Lukoil maintaining its role as a principal supplier under long-term agreements...

As of 2024, STAR’s crude feedstock is approximately 98% dependent on Russian oil, with 73% of its supplies coming directly from Lukoil, a company under US sanctions. Notably, around 87% of STAR’s seaborne exports are directed to G7+ countries. As a result, a substantial portion of the refinery’s export revenues—derived from sales in European markets—ultimately flows back to Russia. The refinery has been a significant purchaser of Russian Urals blend crude under term contracts with Lukoil...

The limited effectiveness of the price cap mechanism has been underscored by the persistent operation of shadow tankers involved in circumventing Western sanctions... Moreover, the role of third countries in facilitating indirect imports of Russian-origin fuels has become increasingly prominent... Despite sweeping sanctions regimes imposed by the G7+, there has been no significant decline in Russia’s oil and gas revenues...

...other Azerbaijani-flagged Aframax tankers, have also avoided inclusion in sanctions lists issued by the European Union—across three distinct sanctions packages—and by the United States in a significant round of designations. The continued omission of these vessels, despite their apparent involvement in the Russian oil trade, underscores the gaps and inconsistencies in current sanctions enforcement. These enforcement failures risk undermining the credibility and efficacy of international efforts to curtail Russia’s wartime revenues.