The United States announced a temporary waiver on Thursday, permitting Russian oil cargoes stranded at sea to be sold to India. This move aims to alleviate mounting pressure on global oil markets amid increasing geopolitical tensions and supply disruptions caused by ongoing conflicts involving Iran and the US.
The waiver specifically applies to Russian oil shipments that had already been loaded onto tankers before recent US sanctions took effect but remained unsold due to tightening restrictions. According to US officials, the measure allows these cargoes to be offloaded and sold to India within a limited timeframe, helping to prevent further supply disruptions that could destabilize global energy markets.
US Treasury Secretary Scott Bessent confirmed the development, stating, “India is an essential partner of the United States,” and emphasizing that “this stop-gap measure will alleviate pressure caused by Iran’s attempt to take global energy hostage.” He also expressed that the US anticipates increased Indian purchases of US oil as a result.
“To enable oil to keep flowing into the global market, the US is issuing a 30-day waiver to allow Indian refiners to purchase Russian oil,” Bessent explained. He noted that the temporary exemption would be limited to cargoes already at sea and would not significantly benefit Moscow financially.
The move comes amid ongoing tensions in the Strait of Hormuz, a strategic chokepoint responsible for about 20% of global oil supply, which Iran has effectively closed as part of its wider conflict with the US.
India, one of the world’s largest crude oil importers, has become a key buyer of discounted Russian oil since Western sanctions intensified following Moscow’s invasion of Ukraine in 2022. However, earlier this year, New Delhi began reducing its Russian oil purchases under pressure from Washington, which seeks to limit revenue supporting Russia’s military efforts in Ukraine.
Reducing Russian imports allowed India to avoid potential 25% tariffs and secure a temporary trade agreement with the US.
Refiners Eye Prompt Russian Cargoes
Indian state-run refiners—including Indian Oil Corporation, Bharat Petroleum Corporation, Hindustan Petroleum, and Mangalore Refinery and Petrochemicals Limited—are reportedly in negotiations with traders to purchase Russian crude for immediate delivery, according to Reuters sources.
One source indicated that Indian refiners have already bought approximately 20 million barrels of Russian oil. For some, this marks a return to Russian supply after last sourcing cargoes in November, industry data shows.
Traders are currently offering Russian Urals crude at a premium of USD 4-5 per barrel over Brent, with deliveries expected in March and early April—significantly higher than the discounts of about USD 13 per barrel below Brent seen earlier this year before the conflict escalated.
Reliance Industries has also reportedly approached traders to secure prompt Russian cargoes, reflecting a shift in market dynamics driven more by availability than price.
“India refiners are back in the market nowadays more than prices; availability of molecules is the issue,” said one trader involved in Russian oil sales to India.
The US’s decision was motivated by concerns that an outright blockade of Russian shipments could remove substantial volumes of crude from the market at a time when oil prices are already volatile due to escalating tensions in West Asia and disruptions in shipping routes. By allowing the stranded cargoes to reach Indian refiners, Washington hopes to stabilize supply and prevent sudden price spikes that could impact global inflation and energy security.
Summary:
The US has granted a 30-day temporary waiver enabling the sale of stranded Russian oil cargoes to India, aiming to support global oil markets amid geopolitical tensions and supply disruptions.