Washington had issued temporary waivers last month to stabilize international markets driven upward by the US and Israel's conflict with Iran, but that three-day window expired on April 11. Although Treasury Secretary Bessent asserted on Wednesday that these exemptions would not be extended, the Treasury Department enacted a change of heart only two days later. The department officially extended its pause on sanctions on Friday, authorizing the delivery and sale of Russian oil already loaded onto vessels. This new general license effectively replaces the previous waiver with a near-identical provision, pushing the compliance deadline to May 16.
The extension illustrates how the fallout of the Iran war has inadvertently enabled Moscow to profit from energy exports that were previously restrained following the invasion of Ukraine. By ensuring continuous oil flows, the US waiver addresses immediate crude availability concerns for India. This development is particularly significant as a similar waiver for Iranian crude is set to expire tomorrow, providing a necessary cushion for Indian refiners and allaying fears of an imminent energy shortage.
India currently imports approximately 90% of its crude requirements and relies heavily on Gulf suppliers. About 40% of these imports must navigate the Strait of Hormuz, a strategic maritime chokepoint at the center of the US-Israel-Iran war where numerous ships have been stalled for days. Compounding these logistics, insurance challenges have intensified as insurers reassess risks linked to movements in the Gulf region. Consequently, the waiver on Russian oil is viewed as a crucial mechanism to ease short-term supply pressures for the Indian economy.
However, these fresh supplies may lack the steep discounts India previously enjoyed. Reports indicate Russian crude prices have surged since last week, hitting their highest levels since 2013. While discounted rates once provided a financial buffer against rising global prices, sustained increases now threaten to feed domestic inflation. Despite this, access to Russian crude has remained a fundamental pillar in helping India overcome financial pressures in recent years.
Data from the European think tank Centre for Research on Energy and Clean Air highlights a massive surge in activity, with India's crude imports from Russia tripling to 5.3 billion euros last month. Import volumes have doubled, though rising oil prices have simultaneously driven up the total import bill. This follows a "buying binge" in March after a dip in February purchases. The most significant shift occurred within state-owned refiners, which recorded a 148% month-on-month rise in purchases. In March, India solidified its position as the second-largest importer of Russian oil, accounting for 38% of exports, trailing only China at 51%, and surpassing Turkey. Amidst these shifting allegiances, the Indian Centre maintained there is "nothing wrong" with reports of refiners settling Iran oil deals in Yuan. Ultimately, the US waiver underscores the desperate balancing act of maintaining global energy flows while navigating the geopolitical minefield of the Iran war.
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