Oil slips as US grants 30-day waiver for Indian refiners to buy stranded Russian crude

Crude oil prices fell in early trading on Friday after US Treasury Secretary Scott Bessent said Washington would allow a 30-day waiver for Indian refiners to purchase Russian oil stranded at sea, offering temporary relief to global supply concerns.

The move comes as energy markets remain volatile amid escalating tensions in West Asia and supply disruptions around the Strait of Hormuz, while giving Indian refiners short-term flexibility to access Russian crude shipments already in transit.

This fall in prices comes after a surge of over 15% since last week. Although Indian refiners have been purchasing Russian oil, the procurement declined in the past two months. The announcement may allow further flexibility to Indian refiners to source more Russian crude.

At 8:18 AM, the April contract of the benchmark Brent crude on the Intercontinental Exchange was trading at $84.21 per barrel, lower by 1.52% from its previous close. Similarly, the West Texas Intermediate on the Intercontinental Exchange fell 2.10% to $79.31 a barrel.

Temporary waiver

Taking to X, Bessent said that, the stop-gap measure will alleviate pressure caused by Iran’s attempt to take global energy hostage. Describing India as an essential partner of the US, and he said that the US expects New Delhi to ramp up purchases of American oil.

"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. This deliberately short-term measure will not provide significant financial benefit to the Russian government as it only authorizes transactions involving oil already stranded at sea," he said.

A notification by Office Of Foreign Assets Control (OFAC) of the US Department of Treasury said that the relaxation is allowed for Russian-origin crude oil loaded on vessels on or before 12.01 AM eastern standard time (10.31 AM Indian Standard Time), 5 March 2026.

Import shifts

Mint earlier reported that as fresh oil supplies from West Asia dwindle with the Strait of Hormuz being choked, Indian refiners are likely to increase oil imports from Russia.

Although imports from Russia dipped following the sanctions and announcement of India's interim trade deal framework with the US, they did not halt completely, with supplies coming from non-sanctioned entities.

In February, Russia supplied 1.04 million barrels of oil per day (bpd) on an average, followed by 1 million bpd by Saudi Arabia and 980,000 bpd by Iraq, according to data from global ship tracking firm Kpler.

The supplies from Russia have significantly dropped from the much higher levels of 1.8 million bpd in November 2025 and 2 million bpd in July 2024. In the last financial year (FY25), Russian supplies to India averaged 1.8 million bpd.

Tariff warning

The announcement of allowing India an exemption for 30 days also comes after an Executive Order by US President Donald Trump last month while revoking the 25% additional tariff on India, said that a US government panel will monitor whether India resumes import of Russian oil, with the tariff liable to be reimposed if such purchases restart.

India, has, however maintained that India's oil import policy is driven by its national interest.

Foreign secretary Vikram Misri later told reporters that India will maintain multiple sources of energy and diversify them to ensure stability, with national interest guiding all purchases.

“Our approach is to maintain multiple sources of supply and diversify them as appropriate to ensure stability. Therefore, I would say that the more diversified we are in this area, the more secure we are,” Misri said.

Energy exposure

The recent surge in oil price carries significant implications for India, a net importer that meets nearly 90% of its oil requirement through imports.

Furthermore, not just oil, but liquefied natural gas supplies would also be impacted. In FY25, about 50% of India’s crude oil imports and 54% of LNG imports were routed through the Strait of Hormuz.

Higher oil prices may impact growth, raise fiscal deficit challenges, drive up inflation, widen the current account deficit, and put downward pressure on the rupee.

India, the world’s third-largest oil buyer, consumes about 5.5 million barrels of crude daily, of which 1.5–2 million barrels pass through this chokepoint. With India already lowering Russian oil imports, West Asia had emerged as the alternative over the past two months.

According to report by S&P Global Energy, the war between the US and Israel against Iran has the potential to be the largest oil supply disruption in history if oil flows through the narrow Strait of Hormuz remain low or come to a halt.

Initially, energy infrastructure had not been targeted by Iran, but that has changed with attacks on facilities in Saudi Arabia and Qatar.

This adds a critical further dimension to the shock wave hitting oil and gas markets, noted the report on Thursday, while adding that S&P Global Energy Commodities at Sea data shows that on 1 March only 5 oil tankers transited the Strait compared with around 60 tankers per day recently.

“The duration of the war is critical. If the reduction in tanker traffic continues for a week or so it will be historic. Beyond that it would be epochal for the oil market with prices rising to ration scarce supply and impacts in financial markets," said Jim Burkhard, vice president and global head of crude oil research at S&P Global Energy on Thursday.