US Allows Limited Russian Oil Supply to India for 30 Days

New Delhi: The United States Department of the Treasury has issued a one-month temporary permission to sell Russian crude oil to India, the decision being taken in order to relieve pressure on oil prices in the world market because of all the turmoil in the Middle East.

Indian refiners will receive already transferred Russian crude under the limited waiver as per an announcement that was made on Thursday. The authorisation will be valid between March 5 and April 4.

This ruling is made when the current conflict between the United States, Israel and Iran has made the shipping routes difficult through the Strait of Hormuz which is a strategically important corridor. The maritime route is a vital energy passage to India and it transports approximately 40 per cent of the Indian crude oil imports.

The officials asserted that the waiver is only applicable to Russian oil cargoes already at sea thus it can always be unloaded in Indian ports within the allowed time.

Short-Term Measure

Scott Besset referred to the action as a short-term measure which was aimed at stabilising the energy markets, but not giving economic relief to Moscow.

According to a statement posted on the social media, Bessent stated that the permission was meant to avoid supply disruption caused by any increase in oil prices in the world market. He stressed that the action would not bring significant economic dividends to Russia since it will only cover those shipments already stuck on vessels.

The Treasury Secretary further explained that Washington anticipates that India will make gradual increases on its purchases of American energy in the longer run.

Bessent stated, "the waiver was a stop-gap measure to soften supply pressure caused by the tensions with Iran, and India is one of the partners of the United States, and we hope that it increases its imports of US oil."

Background of Trade Tensions

The topic of energy trade between India and Russia has been a hot potato in the recent years. In the previous year, Donald Trump administration introduced another 25 per cent tariff on some Indian exports, accusing New Delhi of continuing to purchase discounted Russian crude. The tax was brought in with an already existing reciprocal tariff of equal value.

Even though the penalty tariff has been previously removed earlier this year, the US officials have already hinted that this can be reinstated in case India substantially increases imports of Russian oil.

India's Energy Strategy

India which is the third-largest consumer of crude oil in the world has been seeking alternative supply routes and sources as a measure of reducing its reliance on vulnerable shipping routes.

This was preceded by Hardeep Singh Puri telling the week before that Indian energy firms were starting to tap into non-Strait of Hormuz supplies. In a statement to reporters March 3, Puri indicated that such contingency plans should be used to mitigate the effects of the short-term shocks due to the current conflict in the area.

However, the minister did not disclose the exact origin of these shipments.

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