US relaxes sanctions on Indian imports of Russian oil

The US has granted India a temporary 30-day waiver allowing its refiners to purchase Russian crude oil cargoes already stranded at sea in a stopgap move designed to prevent supply disruptions in global energy markets as the conflict in the Middle East threatens critical shipping routes.

US Treasury Secretary Scott Bessent announced the decision in a statement, describing it as a narrowly tailored measure intended to keep oil flowing while maintaining pressure on Moscow.

“To enable oil to keep flowing into the global market, the Treasury Department is issuing a temporary 30-day waiver to allow Indian refiners to purchase Russian oil,” Bessent said. “This deliberately short-term measure will not provide significant financial benefit to the Russian government as it only authorizes transactions involving oil already stranded at sea.”

President Trump’s energy agenda has resulted in oil and gas production reaching the highest levels ever recorded.

To enable oil to keep flowing into the global market, the Treasury Department is issuing a temporary 30-day waiver to allow Indian refiners to purchase Russian oil.…

— Treasury Secretary Scott Bessent (@SecScottBessent) March 6, 2026

The move comes as the war involving Iran, Israel and the US disrupts energy supply chains across the Middle East, raising concerns about potential shortages in Asia and Europe.

The Strait of Hormuz, a critical maritime corridor through which roughly a fifth of global oil supply flows, has become a focal point of market anxiety.

For India, the world’s third-largest oil importer, the crisis has exposed the fragility of its energy supply chain.

The country imports the bulk of its crude oil and relies heavily on the Middle East. About 40% of its oil imports typically transit through the Strait of Hormuz, according to industry data. The country’s strategic reserves cover only about 25 days of demand, leaving limited room to absorb supply shocks.

Prolonged instability fears

The escalating conflict has already disrupted tanker traffic and raised fears of prolonged instability in regional supply routes. In response, Indian refiners have begun securing additional cargoes from alternative sources, including Russia.

State-run refiners including Indian Oil Corp., Bharat Petroleum Corp. Ltd, Hindustan Petroleum Corp. Ltd and Mangalore Refinery and Petrochemicals Ltd (MRPL) have been negotiating with traders to purchase prompt deliveries of Russian crude.

Indian state refiners have already secured about 20 million barrels of Russian crude from traders in recent days as they scramble to lock in supply before the waiver expires, Reuters reported, citing people aware of the developments.

The urgency reflects a shift in market conditions. Russian Urals crude, which had traded at discounts of about $13 per barrel to Brent earlier this year, is now being offered at premiums of $4 to $5 per barrel for cargoes arriving in India during March and early April.

Traders said the change underscores a tightening global market rather than improved pricing leverage.

Russian oil floating offshore

The waiver is limited to Russian crude cargoes already in transit or stranded offshore, a measure aimed at preventing tankers from being forced to divert cargoes elsewhere.

According to shipping data cited by market intelligence firms, millions of barrels of Russian crude are currently floating near Indian waters, with additional volumes positioned across the Indian Ocean region.

Some estimates suggest as much as 30 million barrels could potentially be redirected toward India if refiners move quickly to secure cargoes.

Indian Oil has already received cargoes from tankers anchored offshore, while other refiners are evaluating similar purchases as the waiver period begins.

Private refiners are also re-entering the market. Reliance Industries Ltd has approached traders to secure prompt deliveries of Russian crude, according to people aware of the developments.

The waiver highlights the delicate balancing act between India’s energy security needs and its evolving economic relationship with Washington.

Earlier this year, Indian refiners had reduced Russian oil purchases as New Delhi sought to advance a trade agreement with the US.

The two countries announced a framework for a bilateral trade pact that aims to lower tariffs and deepen economic cooperation across sectors including energy.

At the time, traders said Indian refiners had declined offers for Russian crude cargoes scheduled for March and April delivery as part of efforts to align with US concerns over Russia’s energy revenue.

The Middle East crisis has now forced a reassessment. By allowing India to purchase oil already at sea while encouraging a longer-term shift toward American crude, the waiver attempts to reconcile those competing pressures.

Bessent emphasized that Washington expects India to expand imports of US energy.

“India is an essential partner of the United States, and we fully anticipate that New Delhi will ramp up purchases of US oil,” he said.

Energy analysts said the move reflects a pragmatic recognition that sudden disruptions to global supply could drive oil prices sharply higher.

Recent disclosures by Indian oil companies indicate that refiners have been closely monitoring the evolving geopolitical situation.

MRPL, part of the ONGC group, recently informed exchanges that volatility in global crude markets could affect procurement strategies and margins as the Middle East conflict intensifies.

Similarly, filings and market commentary from companies such as Adani-linked energy businesses and other refiners have highlighted heightened uncertainty in crude sourcing and freight costs.

Refiners are particularly sensitive to shipping disruptions in the Persian Gulf and Arabian Sea, which could increase insurance premiums and tanker charter rates.

For companies operating complex refineries designed to process a wide range of crude grades, access to Russian oil has historically provided flexibility in feedstock selection.

Energy security India’s key concern

India’s energy strategy has long centered on diversification.

Over the past three years, Russia emerged as a major supplier after Western sanctions forced Moscow to offer steep discounts. Russian crude rose from less than 1% of India’s imports before the Ukraine war to become one of its largest sources of supply.

However, geopolitical pressure from the United States and Europe has steadily complicated that relationship.

Washington has imposed sanctions on several Russian oil companies and shipping firms, while threatening tariffs on countries seen as helping Moscow sustain energy revenues.

At the same time, India has increased imports of crude from the US, West Africa and Latin America to reduce dependence on any single supplier.

Meanwhile, some energy traders said the US decision is ultimately designed to prevent a sudden squeeze in global supply.

If Russian cargoes already at sea were unable to reach buyers, millions of barrels of crude could remain stranded while refineries elsewhere scramble for replacement barrels.

Such disruptions could amplify price volatility at a moment when oil markets are already reacting to the Middle East conflict.

Allowing those shipments to proceed provides immediate liquidity to the market while preserving the broader sanctions regime targeting Russia’s oil industry, analysts said.