The trade licence that came into effect Wednesday is of "indefinite duration" according to the Department of Business and Trade website, and will be periodically reviewed.

It will allow the UK to import Russian crude oil refined in third countries such as India.

The government also issued a temporary licence loosening sanctions on liquefied natural gas originating from certain Russian plants.

Britain imposed a stringent sanctions regime against Russia following the 2022 invasion of Ukraine, targeting oil exports as well as over 3,000 individuals and companies.

The decision follows a US sanctions waiver for Russian oil cargoes already at sea, which was extended Monday for the second time as its war against Iran squeezes global oil supplies and sends energy prices soaring.

The European Union criticised the US waiver extension on Tuesday at a meeting of G7 finance ministers that the UK was a part of.

EU economics commissioner Valdis Dombrovskis said it was not a time to "ease pressure on Russia".

UK Treasury minister Dan Tomlinson said the sanctions easing was "protecting the UK national interest".

"The government has announced yesterday this time-limited change to the rules around oil and refining given the extremes of the impacts of the conflict in Iran, and the impact of it washing up on our shores," Tomlinson told Sky News.

In retaliation to US-Israeli strikes launched in February, Iran effectively shut the Strait of Hormuz, though traffic in the key waterway has slowly edged higher during a ceasefire.

Kemi Badenoch, leader of the opposition Conservative party, denounced the move.

"After 18 months of 'standing up to Putin' the Labour govt quietly issued a licence allowing imports of Russian oil refined in third countries," Badenoch said on X.