US declares 30-day waiver for India to buy Russian oil

NEW DELHI: With global crude oil prices crossing the $90 per barrel mark, the US on Friday said it was working with India to mop up excess Russian oil barrels floating around South Asia and cool prices.US energy secretary Chris Wright told a news channel there is a lot of Russian oil floating at sea. "We have reached out to our friends in India to buy stored Russian oil. That pulls oil into Indian refineries and releases pressure on other global refineries to buy oil that is not competing with Indians in the marketplace," Wright said, adding that the US has taken several such short-term measures to ensure availability of crude globally.

However, he said there was no change in US policy towards Russia.The statement came hours after the US issued an order granting a 30-day waiver, or "licence", for delivery and sale of crude oil and petroleum products of Russian origin to India. This allows Indian refiners to purchase Russian cargoes currently stranded at sea. Though only a reprieve, the respite from US sanctions on Russian crude and petroleum products could not have come at a more opportune time for India and other import-dependent countries.

India moved quickly. Bloomberg reported that over 10 million barrels of Russian crude have already been bought, much of it possibly even before the waiver was announced. 'India has very comfortable crude stocks' Around 15 million crude barrels are currently on tankers in the Arabian Sea and the Bay of Bengal, while vessels carrying another seven million barrels are idling near Singapore. More tankers in the Mediterranean Sea and the Suez Canal are also heading towards the subcontinent.

All of that crude could reach Indian ports within a week.Indian refiners had gone slow on purchasing Russian oil after the US agreed to a framework trade deal and removed the penal tariff. But with supply crunch on account of the conflict in West Asia, which has pushed up global prices, resuming purchase of Russian crude, which comes at discounted price, has become a dire necessity. US's decision to suspend the threat of penalty for buying from Russia, relieved any worry about the Trump administration's response to fresh purchases of Ural crude.West Asia accounts for over 40% of India's oil purchases with Russia's share pegged at nearly 20% in Feb, compared to over 35% a few months ago. Govt officials said Indian refiners may go for spot purchases of Russian crude floating at sea to plug any supply gap, although crude is now available at a premium amid soaring global prices.Indian crude oil basket touched $93.41 per barrel on March 5, over 35% higher than the monthly average of $69.01 in Feb.Officials maintained that India has "very comfortable" crude stocks. "We have sourced more energy from different geographies across the world than what is blocked at the Strait of Hormuz. We are open to purchasing oil from all sources," said a senior official.US treasury secretary Scott Bessent said on X President Trump's energy agenda had resulted in oil and gas production reaching the highest levels ever recorded.

"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," Bessent said, adding the order is restricted only to Russian cargoes stranded at sea."This stop-gap measure will alleviate pressure caused by Iran's attempt to take global energy hostage," he added. Bessent also said Washington expected India to eventually buy more oil from the US.Indian refiners had never ceased purchasing oil from Russia, which remained the biggest supplier of crude to India even in Feb. According to data from Kpler, crude imports from Russia in Feb were a little over 1 million barrel a day (mbd), compared with 1.1 mbd in Jan and 1.2 mbd last Dec.Fall in crude imports from Russia is significant in the wake of Trump's claim that Indian refiners will stop purchases from Russia, with govt maintaining that commercial interests will drive the decision.While India's crude imports are estimated at nearly 5.5-5.6 mbd - almost 90% of total domestic consumption - officials said only 0.2% used to come from Russia before 2022, when the war with Ukraine broke out and Russian oil became available at deep discounts. Cargoes from Russia hit a peak of nearly 2.2 mbd in May 2023.