US grants India 30-day waiver to purchase Russian oil amid Iran's blockade of Strait of Hormuz

The United States Treasury Department on Thursday said it has granted a 30-day waiver to India to purchase Russian oil as New Delhi looks at ways to navigate an oil supply crunch triggered by the Middle East conflict.

US Treasury Secretary Scott Bessent announced the decision in a post on X, saying it will enable oil to keep flowing into the global market.

“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,” he wrote. 

Bessent added that the waiver only covers  Russian oil stuck at sea.

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

“India is an essential partner of the United States, and we fully anticipate that New Delhi will ramp up purchases of US oil. This stop-gap measure will alleviate pressure caused by Iran’s attempt to take global energy hostage,” Bessent added.

The Treasury Department's license authorises crude oil or petroleum products of Russian origin loaded on any vessel on or before 5 March, 12:01 am EST through 12:01 eastern daylight time on 4 April, provided that they are delivered to India.

India, US and the Russian oil saga

The move by the United States comes months after President Donald Trump slapped a massive 25% tariff on Indian exports to the US for New Delhi's sustained purchase of Russian oil despite his warnings against the action.

Washington revoked the tariff after India and the US struck an interim trade agreement last month.

The US claimed India halted Russian oil imports as part of the trade deal, but New Delhi never accepted that claim. 

Following the Iran conflict and Tehran's subsequent blockade of the key Strait of Hormuz, a lifeline for global oil supply, reports suggested India resumed buying Russian oil.

State-run Hindustan Petroleum Corp resumed the purchase of Russian oil after a three-month gap, buying two cargoes for arrival later this month, Reuters quoted two people familiar with the development.

India's imports of Russian crude fell to about 1.1 million barrels per day in January, the lowest since November 2022, as per data cited by Reuters.

Is India facing an oil shortage?

Indian state refiners and government officials met earlier this week to consider contingency measures, including turning to Russian cargoes loitering near its waters, according to Bloomberg.

This came after concerns of Iran blocking the Strait of Hormuz amid its conflict with the US and Israel. India gets about 40% of its oil imports from the Middle East through the Strait of Hormuz.

Earlier, reports suggested that India had oil to sustain demand for 25 days.

However, an ANI report on Wednesday, quoting unnamed government officials, said New Delhi had no plans to ration petrol and diesel, as sufficient stocks are available to meet requirements.