The United States’ decision to grant India a temporary 30-day waiver to purchase Russian crude oil currently stranded at sea, represents a carefully calibrated move to keep a strategic ally happy while maintaining the threat of pressure on Russia for the future.
The waiver was announced Friday by US Treasury Secretary Scott Bessent, underscoring how Washington is attempting to balance pressure on Moscow with the realities of global energy dependence, while reinforcing its ‘Asian pivot’ towards New Delhi.
The waiver will allow Indian refiners to buy Russian oil cargoes already loaded and in transit, ensuring that these supplies can reach markets without generating significant new revenue streams for Russia.
According to highly placed sources, “Washington’s waiver will act as a pressure-release valve for global markets” Approximately 20 million barrels of Russian crude will be eligible under the temporary measure, allowing Indian refiners to secure immediate cargoes that might otherwise remain stranded.
Major state-run companies, including Indian Oil Corp (IOC), Bharat Petroleum (BPCL), Hindustan Petroleum (HPCL) and Mangalore Refinery and Petrochemicals Ltd (MRPL), along with private sector giant Reliance Industries have reportedly resumed or intensified negotiations for these shipments, indicated sources.
However, market dynamics have shifted, pointed out officials. Russian Urals crude, once available at deep discounts of about USD 13 per barrel below Brent, has now become costlier amid tight supply and strong demand for prompt cargoes. Indian refineries will have to pay USD 2-4 more per barrel of Urals crude oil than for Brent, market analysts said.
They said nearly 20 million barrels are on tankers in the Indian Ocean area. These shipments are expected to reach Indian ports within a week, for more supplies Indian shippers will have contract oil tankers which are in the Black Sea and bring them through the Suez Canal and the Mediterranean Sea.
By limiting the authorisation to oil already stranded at sea, the American administration wants to signal it will not allow disruptions in global supply while maintaining the broader sanctions architecture imposed upon Moscow ever since the Ukraine conflict started.
The immediate rationale behind the decision lies in the fragile state of global oil markets. Rising tensions in West Asia, in particular concerns over the security of shipping through the Strait of Hormuz, through which a fifth of the world’s energy cargos transit, have heightened fears of supply disruptions.
Nearly half of India’s crude oil imports, about 2.5–2.7 million barrels per day, pass through the narrow waterway connecting the Persian Gulf to the Arabian Sea and India’s coastal refineries. Around 60 per cent of its liquefied natural gas supplies follow the same route.
Recent geopolitical developments, including the spectre of tanker harassment, missile strikes and actual closure of the Strait, are events which are pushing up crude oil prices sharply higher. Brent crude prices have already crossed USD 80 a barrel as on Friday at 4.00 pm IST.
“The decision also reflects Washington’s recognition that sudden disruptions in supply can undermine the broader objectives of sanctions policy. Energy shocks tend to drive prices upward, potentially benefiting sanctioned producers indirectly while harming the global economy,” said Prof Biswajit Dhar, former WTO Chair at the Indian Institute of Foreign trade.
Analysts say India’s vulnerability lies not necessarily in a complete cut-off of supplies but in cascading effects such as shipping delays, higher freight costs and price spikes that could ripple through its export-driven sectors.
This stability carries broader macroeconomic implications. “India’s current account deficit, currently around 1.3 per cent of GDP, is highly sensitive to oil prices. For every USD 10 a barrel increase in Brent crude prices, the current account deficit could go up by roughly 50 basis points,” said Dhar.
India, the world’s third-largest oil consumer, will, however, gain only short-term relief from this measure, and unless the war were to end quickly, New Delhi will have to continue shifting for itself in search of new sources of energy to satisfy the huge domestic market for petro-fuel.Jayanta Roy Chowdhury
