The move is part of a broader plan by US officials to address problems in energy markets worldwide. Officials said the waiver is meant to ensure that oil already at sea reaches buyers instead of being stuck because of changes to the rules. 6 people who know about the situation told Reuters that Indian refiners are buying millions of barrels of quick Russian crude oil cargoes as the country tries to get around an oil supply crisis caused by the war in the Middle East.
India is sensitive to changes in the energy supply because its crude oil stocks only meet about 25 days of demand. Indian oil comes from the Middle East through the Strait of Hormuz about 40% of the time.
After Moscow invaded Ukraine in 2022, India bought the most Russian crude oil by sea. But in January, Indian refiners started buying less because Washington told them to. Cutting back on its sales of Russian oil helped New Delhi avoid 25% taxes and reach a trade deal with the US.
A person with direct knowledge of the situation said that India had asked Donald Trump’s government for permission to buy Russian oil because of the war in Iran.
India’s oil and foreign ministries did not answer emails from Reuters asking for views
Multiple sources told Reuters that Indian Oil, Bharat Petroleum, Hindustan Petroleum, and Mangalore Refinery and Petrochemicals are in talks with traders to make sure that Russian cargo gets delivered quickly.
One of the sources said that so far, Indian state refineries have bought 20 million barrels of Russian oil from sellers.
According to information gathered from inside the business, HPCL and MRPL last got Russian oil in November. Indian businesses can do business with these specific Russian oil shipments thanks to a special permit. The waiver, however, does not allow any new sales beyond the goods already shipped before the limits were put in place.
Read also: Trump Cuts India Tariffs in Deal He Links to Russian Oil
Pressure on the world’s energy markets
Any trouble in these places can quickly drive up prices and leave supplies running out around the world.
The permission was granted so that current oil stocks could continue to move through the market, according to US sources. These shipments could help keep the world’s energy system from becoming even more stressed at a time when markets are already under significant strain.
The government wants to avoid sudden shocks that could drive up prices and hurt economies worldwide by allowing oil that has already been shipped to reach buyers.
Also read: India crude buy helps global market stability: Russia
Why India Plays a Key Role
India has bought more cheap Russian oil over the past few years, especially since Western sanctions changed the way the world trades energy. Indian refiners were interested in Russian crude because it was cheaper than oil from other countries.
The US waiver takes into account India’s status as a big energy user. Officials agreed that stopping shipments already on their way could cause problems for Indian refiners and the world market as a whole, that were unnecessary.
But the waiver is very limited and does not mean that policies about Russian oil will change permanently.
Read more: India to import Crude Oil from cheapest, best-quality
What the waiver doesn’t cover
The US government made it clear that the waiver only applies to Russian oil shipments that were already on ships before the policy changed. This means that the move is limited and short term, not a general loosening of rules.
The goal is to avoid the organizational problems that arise when oil ships are stuck at sea without a legal way to reach buyers. If the permission hadn’t been given, millions of barrels might still not have been sold.
Officials also said that allowing these shipments to reach India doesn’t bring in much more money for Russia, since the oil had already been sold and moved before the deadline.
By allowing only current ships to go through, the US hopes to strike a balance between two goals: keeping the pressure on Russia and preventing the global energy supply line from being disrupted for no reason.
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