Oil prices slightly lower after US allows all countries to purchase Russian oil for 30 days

Global crude prices were trading marginally lower after the US Treasury Department announced a 30-day waiver allowing all countries to purchase Russian oil currently stranded at sea.

The development comes a week after the US allowed India to buy Russian oil loaded on vessels as of 5 March, offering temporary relief to global supply concerns.

At 7:15 AM, Brent crude was trading at $99.99 per barrel, down 0.47%, while West Texas Intermediate (WTI) fell 0.67% to $95.09 per barrel.

However, concerns over a prolonged conflict in West Asia and a potential blockade of the Strait of Hormuz prevented a sharper decline in prices.

US waiver

Taking to X, US Secretary of Treasury Scott Bessent said:

“To increase the global reach of existing supply, @USTreasury is providing a temporary authorization to permit countries to purchase Russian oil currently stranded at sea. This narrowly tailored, short-term measure applies only to oil already in transit and will not provide significant financial benefit to the Russian government, which derives the majority of its energy revenue from taxes assessed at the point of extraction.”

"The temporary increase in oil prices is a short-term and temporary disruption that will result in a massive benefit to our nation and economy in the long-term," he added.

The Office of Foreign Assets Control (OFAC) said the waiver applies to Russian-origin crude oil and petroleum products loaded on vessels—including sanctioned vessels—on or before 12:01 am Eastern Daylight Time on 12 March.

Hormuz tensions

The announcement came shortly after Iran’s new Supreme Leader, Mojtaba Khamenei, said the country would continue blocking the Strait of Hormuz, one of the world’s most critical oil transit routes.

The strait handles roughly 20% of global oil supplies, making any disruption there a major risk to energy markets.

On Wednesday, the US announced the release of 172 million barrels from its strategic petroleum reserves, in line with the International Energy Agency’s decision to release 400 million barrels from member countries’ reserves to stabilize supply.

A recent report by S&P Global Energy said the disruption initially stemmed from transportation issues through the Strait of Hormuz, but concerns are now shifting to oil production itself in the region.

“Iraq has already shut-in 2 million b/d of production due to storage constraints. Kuwait has shut in some production and others may be cutting output or preparing to do so as storage capacity fills up. Platts is reporting that oil production in Iraq’s southern fields has fallen from 3.3 million b/d to 1.3 million b/d,” it said.

India exposure

The developments are closely watched in India, which imports nearly 90% of its crude oil requirements, making it highly sensitive to global price swings.

According to estimates, a $1 per barrel increase sustained for a year raises India’s annual import bill by about ₹16,000 crore, putting pressure on the current account deficit and inflation.

The latest tensions have already begun to ripple through domestic supply chains. India recently faced a commercial LPG crunch, with several restaurants and food outlets reporting difficulty in procuring cylinders as shipping disruptions tightened energy supplies.

Higher crude prices can also feed into transportation, fertilizer, petrochemical and cooking gas costs, amplifying inflationary pressures across the economy.