The US has temporarily allowed India to buy Russian oil currently stuck at sea in an effort to keep global supplies flowing and temper further price increases.
On Thursday the US treasury issued a 30-day waiver allowing India to buy Russian oil, having previously imposed heavy sanctions related to the war in Ukraine.
“To enable oil to keep flowing into the global market, the treasury department is issuing a temporary 30-day waiver to allow Indian refiners to purchase Russian oil,” the treasury secretary, Scott Bessent, said in a statement posted to social media. “This stopgap measure will alleviate pressure caused by Iran’s attempt to take global energy hostage.”
In August the US president, Donald Trump, imposed an additional 25% import tariff on India over its purchase of cheap Russian oil, arguing New Delhi’s purchases were undermining US sanctions and helping Putin bankroll the invasion of Ukraine.
“This deliberately short-term measure will not provide significant financial benefit to the Russian government as it only authorises transactions involving oil already stranded at sea,” Bessent said.
He added that he expected India to eventually buy more US oil.
“This week’s strait of Hormuz closure has driven a scramble for alternate supplies,” analysts at RBC said. “Asian markets are some of the most exposed to the ongoing disruption, with the lion’s share of both crude and product cargoes in the strait historically heading to APAC. Though Europe also relies on the Middle East for major portions of its jet and diesel imports.”
Indian refiners are buying millions of barrels of Russian crude oil cargoes as India seeks to navigate an oil supply crunch triggered by the Middle East conflict.
“The [US] measure is aimed at Russian oil that is already stranded at sea, so should be viewed as more of a short-term relief for Asian refiners,” analysts at Deutsche Bank said.
India was the top buyer of Russian seaborne crude after Moscow’s 2022 Ukraine invasion, but in January its refiners started to reduce purchases under pressure from Washington.
Cutting Russian oil purchases helped New Delhi avoid 25% tariffs and clinch an interim trade deal with the US.
India is vulnerable to energy supply shocks, with crude stocks covering only about 25 days of demand. India receives about 40% of its oil imports from the Middle East through the strait of Hormuz.
A source directly involved with the matter said India had approached Trump’s administration seeking approval to buy Russian crude imports because of the Iran conflict.
The state refiners Indian Oil, Bharat Petroleum, Hindustan Petroleum, and Mangalore Refinery and Petrochemicals are talking to traders for prompt delivery of Russian cargoes, according to Reuters.
One of its sources said Indian state refiners have bought about 20m barrels of Russian oil from traders so far.
HPCL and MRPL last received Russian oil in November, according to data obtained from industry sources by Reuters.
The Kremlin said on Friday that the war in Iran had fuelled demand for Russian energy products, noting that buyers such as China and India were guided by their national interests.
The Kremlin spokesperson, Dmitry Peskov, told reporters that Russia has been and remained a reliable supplier of oil and gas, via pipelines and in liquefied form.
