US Grants 30-Day Waiver for India to Buy Russian Crude

The United States has granted a temporary 30-day exemption permitting Indian refiners to buy Russian crude that is currently held up at sea.

The US Treasury Secretary, Scott Bessent, said the decision is intended as a short-term step to ensure global oil supplies remain stable as the conflict in the Middle East continues to disrupt energy markets.

Why Is This Waiver Important For India?

89%-90.6% of India’s energy needs are dependent on crude oil imports, which is why the waiver is being granted. The country's strategic reserves are assumed to cover only around 25 days of demand, so there is hardly any cushion in case there are interruptions in the global supply.

Besides that, nearly 35%-50% of India's oil imports come through the Strait of Hormuz, which is not only a major shipping lane but one that has seen rising geopolitical tensions recently.

Following the Russia–Ukraine war in 2022, India emerged as one of the largest buyers of Russian crude transported by sea.

Earlier this year, New Delhi started reducing these purchases after pressure from the United States. Cutting back on Russian imports helped India avoid possible trade tariffs and also supported broader efforts to strengthen economic ties with the US.

How Are Indian Refiners Responding?

After the waiver announcement, a number of state-owned refineries in India started contacting the traders to organise quick supplies of Russian crude. State-run refineries are looking at new purchases for their continuous supply of crude oil to the refineries.These include:

• Indian Oil Corporation

• Bharat Petroleum

• Hindustan Petroleum Corporation Ltd. (HPCL)

• Mangalore Refinery and Petrochemicals Limited (MRPL)

People familiar with the discussions mentioned that state refiners have already secured close to 20 million barrels of Russian oil through intermediaries.

Pricing conditions have also changed in recent weeks. Russian Urals crude, which had earlier been available at a large discount (~$13 per barrel in February), is now being quoted to Indian buyers at a premium of about $4–$5 per barrel over Brent prices for shipments expected in March and early April.

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What Should Investors Watch Next?

Investors could watch closely the global crude prices moving forward, especially as the energy markets keep getting affected by the ongoing tensions in West Asia.

Any disruption of major shipping routes such as the Strait of Hormuz could not only affect supply flows but also result in import cost hikes for countries like India.

Also, it would be prudent to focus on India's crude procurement strategy. How much refiners rely on the temporary waiver to buy their products from Russia, along with changes in the global supply and refining margins, will determine the energy outlook for the sector.

Sources:

MoneyControl

Business Today

Indianexpress

ET