The UK government has relaxed strict sanctions on Russian crude oil, allowing for the import of jet fuel and diesel refined in third countries amid surging costs.

A trade licence that came into effect on Wednesday permits the imports indefinitely and will be reviewed periodically. It comes at a time of growing concerns over the supply of certain fuels due to the de facto blockade of the strait of Hormuz since the start of the US-Israeli war with Iran.

For years the UK has led international efforts to put economic pressure on Russia over its war on Ukraine. On Tuesday it signed a G7 statement reaffirming its “unwavering commitment” to imposing “severe costs” on Russia. It had previously announced it would block Russian oil refined in other countries to “further restrict the flow of funds to the Kremlin”.

This week the US treasury secretary, Scott Bessent, extended a 30-day sanctions waiver allowing the purchase of Russian oil shipments already at sea, saying in a post on X that the extension would “provide additional flexibility, and we will work with these nations to provide specific licences as needed”.

New figures show petrol prices have eclipsed the high set during the Iran oil crisis. Relaxing sanctions will allow imports of jet fuel from India, which was previously a key supplier to the UK and Europe. Russian crude is also refined in big quantities in Turkey.

Emily Thornberry, the chair of the foreign affairs committee, said it was the wrong time to relax sanctions. She told BBC Radio 4’s Today programme: “I’ve heard from people in Ukraine overnight and I know that they are very disappointed and have been asking me why it is that Britain is doing this.

“We’re talking about our allies in Ukraine who have been fighting a war bravely against Russia for years and years with our support and they have looked to Britain as one of their most important allies and they don’t understand, given that we promised that we would stop this loophole in October and we still haven’t done it. In fact, it seems to have got worse. People feel very let down.”

With a negotiated solution to stopping the war in Ukraine very difficult at the moment, she said, “the only other way of pushing forward is by stronger sanctions”.

Thornberry said every time Vladimir Putin came to the negotiating table “he just takes the mickey”. “He needs to really feel the impact of continuing to be involved in the war in Ukraine and we should not take a foot off the pressure now,” she said.

The Conservative leader, Kemi Badenoch, called the move “insane”. She posted on X: “After 18 months of ‘standing up to Putin’ the Labour govt quietly issued a licence allowing imports of Russian oil refined in third countries.

“Yesterday Labour MPs voted against UK oil and gas licences. We are now importing from Russia instead of drilling in the North Sea. Insane.”

The Treasury minister Dan Tomlinson told Sky News hat the government needed to make sure it was “protecting the UK national interest”.

“When there are international conflicts … what we have to do as a government is make sure that we’re protecting the UK national interest, making sure that this impact of conflicts that wash up on our shore, that we’re protecting individual families,” he said.

“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.”

On Tuesday the RAC said the average price of a litre of petrol at UK forecourts stood at 158.5p, the most expensive it had been since December 2022.

It has been widely reported that on Thursday the chancellor, Rachel Reeves, will abandon her plan to increase fuel duty from September.