Following 25 percent of its penalty tariffs on India for purchasing Russian crude canceled last month, the U.S. on Thursday granted New Delhi a 30-day waiver on buying Moscow crude as the Iran war threat sends energy supply shockwaves around the world.
The West Texas Intermediate oil rose 8.51 percent, or $6.35, to close at $81.01 per barrel on Thursday in the biggest single-day gain since May 2020. Global benchmark Brent surged 4.93 percent, or $4.01, to settle at $85.41 per barrel.
The Russian oil purchase waiver will assist in creating supply concerns in the world, as India is the fourth-largest oil refiner and fifth-largest exporter of petroleum products globally.
Experts reported that India, the third-largest oil importer in the world, has been substituting the oil purchases with the Russian oil supply from the Middle East, though with the conflict impacting energy supplies of the Gulf countries, New Delhi is beginning to cast energy support to the Moscow side.
“I’ve heard that Indian refiners have been actively seeking prompt Russian crude supplies since last weekend,” said Muyu Xu, senior research analyst for crude at energy data tracker Kpler, citing that based on “market chatter,” New Delhi is intended to have bought up to 6-8 million barrels of Russian oil over the past 2–3 days.
U.S. Secretary of the Treasury Scott Bessant said in a post on X (formerly known as Twitter), this “short-term measure will not provide significant financial benefit” to Russia as it only enables transactions of oil already stranded at sea.
The U.S. government is making efforts to contain the increase in oil prices, which includes the provision of political risk insurance to tankers passing through the Gulf.
“It [the waiver] is a relief valve, in view of the loss of nearly 20 million barrel per day of crude from the Gulf producers,” said Vandana Hari, CEO of energy research firm Vanda Insights, adding that the 30-day waiver was “not nearly enough” and Washington continues to put “band aids on a gunshot wound.”
The U.S. crude prices have increased by approximately 20 percent this week due to the growing conflict in the Middle East.
U.S. President Donald Trump added on Thursday, “Further action to reduce pressure on oil is imminent and … in the long-term, the actions we’re taking will dramatically increase the stability of the region and oil prices.”
Traffic on the Strait of Hormuz, through which 20 percent of the world’s oil moves, is at a standstill in the wake of Iranian threats and soaring insurance premiums on shippers.
Xu reported, ″Our data shows that no laden crude tankers have transited the Strait of Hormuz since last weekend, including vessels that may be bound for India.”
India now has “access to about 100 million barrels,” enough to cover up to 45 days of crude demand, Prateek Pandey, head of APAC oil and gas research at energy intelligence firm Rystad Energy, told CNBC’s “Inside India” on Thursday.
Pandey stated that Indian refineries will not be affected over the next three to four weeks, but “there will be concerns” if the disruption in the Middle East continues beyond that.
He said that the sourcing of alternative destinations like Venezuela is not easy since such cargoes take nearly a month to arrive in India.
India was previously punished with a 50 percent U.S. tariff in August last year, including a 25 percent tariff, which was imposed on Indian oil purchases of Russian oil.
The penalty was suspended last month on the condition that India would reduce imports from Moscow and purchase additional American energy resources. Washington threatened to reimpose the penalty should India resume purchasing Russian oil.
“I have not yet seen any increase in US crude arrivals into India,” said Xu, stating that any recovery in the New Delhi purchase of American oil following the trade agreement will be reflected in the April or May data.
