US Grants Waiver to India to Buy Russian Oil Temporarily
America granted India a 30-day windfall to purchase Russian oil after Iran blocked the Strait of Hormuz and severed the region’s primary oil supply route , which America could mitigate but not replace. The waiver applies solely to Russian oil that is already at sea, and expires on April 3. India has approximately 45 days of oil in storage and is watching developments closely.
Key Highlights
- India has 30 days to purchase Russian oil as the world’s leading oil shipping lane was frozen by Iran.
- No tankers have transited the Strait of Hormuz since early March, the passage accounts for 20% of world oil.
- Oil Prices Soared Over 13% on the day following the war outbreak on February 28.
- India consumes around 5.5 million barrels of oil daily and imports almost 90% of its requirement.
America Gave India the Green Light to Buy Russian Oil
Only weeks earlier, India had agreed to stop purchasing Russian oil as part of a trade pact with Washington. And now the United States has granted waiver to buy it again. That reversal shows you just how bad things have gotten since the war with Iran began. On Thursday, the US granted India a 30-day waiver to buy Russian oil. It was a quick solution to prevent India from running dry while the Middle East burns.
The trouble began on Feb. 28, when the US and Israel struck Iran killing its Supreme Leader. Iran retaliated and closed the Strait of Hormuz, a narrow passage of water between Iran and Oman through which millions of barrels of oil flow every single day.
What Is the Strait of Hormuz and Why Does It Matter So Much
The Strait of Hormuz is 21 miles wide narrow sea passage between Persian gulf and Oman. But about 20% of all oil traded globally every day, around 20 million barrels, passes through that narrow gap. Saudi Arabia, Iraq and the UAE and Kuwait all transport their oil through it. When that closes, those barrels are going nowhere.
Tankers stayed within the terms of that accord until Iran blocked it, and traffic has since fallen to near zero. Near the strait, three ships were hit. Big shipping lines such as Maersk withdrew entirely. Insurance for ships attempting to pass soared, and it became too costly, and too dangerous, for most of them to even try. The world’s oil supply took a direct hit overnight.
India Got a Wallop, It Needs Oil by the Ton Every Day
India imports about 90% of the oil it consumes. The nation consumes around 5.5 million barrels of crude every day. Before the war, it was receiving nearly 40% of that from the Middle East, mostly via the Strait of Hormuz. That supply is now stuck.
India had been gradually reducing its Russian oil and replacing it with supplies from the Middle East. That plan crumbled immediately when Iran shut the Strait. India now has some 100 million barrels in storage, sufficient for about 45 days. The government is monitoring the energy situation twice daily. It is not yet in crisis, but the clock is ticking.
What the Waiver Said About America
The waiver was announced on Thursday by Scott Bessent, US Treasury Secretary. That 30-day pass applies only to Russian oil that was already on ships out at sea and has no means of reaching customers under existing regulations, he said. It does not permit India to seek fresh Russian oil. Bessent said Russia would not make that much from the deal, since the oil had already been stranded in any case.
He also reiterated that this is a temporary measure. He called India a key partner and suggested that Washington anticipates with full confidence that India will purchase more American oil once the situation stabilises. The waiver expires April 3. Trump, if asked about the rising of petrol prices at home said bluntly, if it went up, then let it go up.
FAQs
1.Why had America allowed India to purchase Russian oil?
Iran closed the Strait of Hormuz, severing India’s traditional Middle East sourcing. Washington had no options but to present India with one for the short term.
2. What is the Strait of Hormuz?
It is a narrow body of water between Iran and Oman. It handles one in five barrels of oil moved around the world. A massive chunk of the world’s oil gets trapped when it closes.
3. Does Russia gain from this waiver?
The oil was already on its way to nowhere, the U.S. says, having been loaded aboard vessels. Russia gains little because it cannot sell any new oil under the deal.
4. What’s going to happen after the April 3 end of the waiver?
And more American oil Washington anticipates India will buy. If the strait remains closed at that point, India will face significant pressure to quickly seek an alternative supply.
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