India gets 30-day US waiver to buy Russian oil shipments stranded at sea

The United States has granted a temporary 30-day waiver allowing Russian oil cargoes stranded at sea to be sold to India, two senior U.S. officials told Reuters, aiming to ease pressure on global oil markets.

In Short

• Waiver to ease pressure from Iran’s energy hostage bid, says Scott Bessent
• 30-day waiver applies only to cargoes loaded before new US sanctions
• India, reliant on Middle East for 40% of oil imports, stands vulnerable amid war

The United States on Thursday issued a temporary waiver allowing Russian oil cargoes currently stranded at sea to be sold to India, in a move aimed at easing pressure on global oil markets amid heightened geopolitical tensions and supply disruptions triggered by the ongoing US-Iran war.

The waiver applies specifically to Russian oil shipments that had already been loaded onto tankers before the latest round of US restrictions took effect but were left without buyers as sanctions tightened. According to officials, the measure allows these cargoes to be offloaded and sold to India within a limited window, preventing supply disruptions that could further strain global energy markets.

Confirming the development, US Treasury Secretary Scott Bessent, said, "India is an essential partner of the United States" and "this stop-gap measure will alleviate pressure caused by Iran’s attempt to take global energy hostage." He added, the US anticipates that New Delhi will ramp up purchases of US oil.

“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 said, adding that the temporary waiver would apply only to cargoes already at sea and would not significantly benefit Moscow financially.

INDIA'S SUPPLY CONCERNS

The waiver comes as India remains vulnerable to disruptions in Middle Eastern energy supplies. According to news agency Reuters, the country holds crude reserves covering only about 25 days of demand and imports roughly 40 per cent of its oil from the region, much of it shipped through the strategically vital Strait of Hormuz.

Iran has effectively closed the Strait of Hormuz, a chokepoint responsible for approximately 20 per cent of global oil flow, as its war with the US continues.

India, one of the world’s largest crude importers, has emerged as a key buyer of discounted Russian oil since Western sanctions were imposed following Moscow’s invasion of Ukraine in 2022. However, India began cutting back purchases earlier this year under pressure from Washington, which has sought to curb revenues supporting Russia’s war in Ukraine.

Reducing Russian imports helped New Delhi avoid potential 25 per cent tariffs and secure an interim trade agreement with the United States.

REFINERS SEEK PROMPT RUSSIAN CARGOES

State-run refiners -- Indian Oil Corporation, Bharat Petroleum Corporation, Hindustan Petroleum Corporation and Mangalore Refinery and Petrochemicals Limited -- are in talks with traders to purchase Russian crude for prompt delivery, Reuters reported, citing six sources familiar with the matter.

One of the sources said Indian state refiners have already bought about 20 million barrels of Russian oil from traders.

For some refiners, the purchases mark a return to Russian supply. Hindustan Petroleum and Mangalore Refinery last received Russian crude shipments in November, according to industry data.

Traders are currently offering Russian Urals crude to Indian buyers at a premium of USD4-5 per barrel to Brent, delivered for cargoes arriving in March and early April, three of the sources said.

Reliance Industries has also reportedly approached traders to secure prompt Russian cargoes.

The pricing marks a dramatic shift from February, when similar cargoes were trading at about USD 13 per barrel below Brent, traders said. Hindustan Petroleum had purchased two cargoes at that earlier discount shortly before the conflict began on February 28.

“India refiners are back in the market nowadays more than prices, availability of molecules is the issue,” a trader involved in Russian oil sales to India told Reuters.

The US's decision was driven by concerns that blocking the shipments entirely could remove significant volumes of crude from the market at a time when oil prices remain volatile due to escalating tensions in West Asia and disruptions to shipping routes. By allowing the stranded cargoes to reach India, Washington hopes to stabilise supply and prevent sudden price spikes that could impact global inflation and energy security.

- Ends