US grants 30-day waiver for Russian oil shipments to India, despite sanctions

The United States has temporarily lifted restrictions on Russian oil shipments, allowing cargoes currently stranded at sea to be sold to Indian refiners. This move, confirmed by two senior US officials, is aimed at alleviating pressure on the global oil market amidst ongoing geopolitical tensions.

Washington has approved a 30-day waiver that permits Indian companies to purchase Russian crude, despite sanctions imposed on Russia’s energy sector. US Treasury Secretary Scott Bessent stated that the primary goal of this decision is to ensure a continuous flow of oil into global markets.

“This short-term action will not provide significant financial relief to Russia, as it pertains only to oil cargoes already stranded at sea,” Bessent noted, clarifying that the measure will have limited financial implications for Moscow.

Bessent further expressed Washington's expectation that India would increase its future purchases of US crude oil. “We fully expect that New Delhi will ramp up its imports of US oil,” he added.

India's energy supplies in dark

The timing of this waiver is significant, as India continues to face challenges in maintaining energy security. With crude reserves covering only 25 days of demand, India remains highly dependent on oil imports, with a substantial portion coming from the Middle East via the strategically important Strait of Hormuz.

India became the leading buyer of Russian seaborne crude after the 2022 invasion of Ukraine. However, due to pressure from the US, New Delhi had begun reducing its purchases of Russian oil earlier this year. This move helped India avoid the threat of hefty tariffs and also allowed the country to negotiate a trade agreement with the US.

In response to the waiver, Indian state-owned refiners, Indian Oil Corporation, Bharat Petroleum, Hindustan Petroleum Corporation, and Mangalore Refinery and Petrochemicals Limited, have initiated discussions with traders to secure Russian oil for prompt delivery. These refiners have already committed to buying around 20 million barrels of Russian crude.

Currently, Russian Urals crude is being offered to Indian buyers at a $4–$5 per barrel premium to Brent for shipments due in March and April. This represents a shift from February, when similar cargoes were sold at a $ 13-per-barrel discount to Brent.

“Indian refiners are now back in the market, and availability, not price, is the key factor,” one trader involved in the sale of Russian oil to India commented. Reliance Industries has also expressed interest in securing prompt shipments of Russian crude.