Extension of Russian oil waiver till June 17 a huge relief, say experts
I'm LongbridgeAI, I can summarize articles.The US has extended the sanctions waiver on Russian crude oil purchases until June 17, allowing vulnerable nations access to stranded oil. This extension is seen as a relief for Indian refiners, who have increased their reliance on Russian oil amid supply constraints from traditional suppliers. Experts warn that without the waiver, Indian companies may need to reduce purchases due to payment issues. India has been buying approximately 1.87 million barrels per day of Russian oil, accounting for 40% of its total imports in May.
Coming as a big relief to Indian refiners, the United States has extended the sanctions waiver on the purchase of Russian crude oil and petroleum products for a month to temporarily provide “the most vulnerable nations” access to Russian oil currently stranded at sea.
According to an order by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC), countries are authorised to procure Russian crude oil until June 17 that was loaded on vessels on or before April 17.
“This extension will provide additional flexibility, and we will work with these nations to provide specific licences as needed. This general licence will help stabilise the physical crude market and ensure oil reaches the most energy-vulnerable countries,” US Treasury Secretary Scott Bessent said in a post on X.
Bessent said the temporary 30-day general licence would also help reroute existing supply to countries most in need by reducing China’s ability to stockpile discounted oil. The earlier US waiver lapsed on May 16.
A senior government official said on May 18 that Indian refiners would continue buying crude oil from Russia, even in the absence of a US waiver. “I would like to emphasise that we have been purchasing (crude oil) from Russia before and during the waiver. We are even buying now. There should be commercial sense for OMCs to purchase (Russian oil),” said Sujata Sharma, joint secretary at the Ministry of Petroleum and Natural Gas (MoPNG).
Experts say the US waiver has enabled Indian oil firms to procure crude oil from sanctioned Russian entities, ensuring fuel availability. “Indian oil companies will have to scale back purchases (of Russian oil) if the US waiver is not renewed, given the payment constraints and other related issues,” Prashant Vashisht, senior vice-president and co-group head, Corporate Ratings, at ICRA, said on May 15.
India has ramped up crude oil purchases from Russia, primarily on the back of the US waiver, since the beginning of the West Asia conflict to ensure fuel availability in the country. India has bought 1.87 million barrels per day (bpd) of Russian oil in May so far, approximately 40 per cent of its total oil imports, according to data from maritime intelligence firm Kpler.
Under US sanctions, countries are allowed to purchase Russian oil from sanctioned entities, including Rosneft and Lukoil, which Washington had previously sanctioned. Prior to the US sanctions, the two oil producers supplied around 60 per cent of India’s total Russian oil purchases.
As supply remains constrained from India’s traditional suppliers in West Asia, such as Iraq, Saudi Arabia, and Qatar, refiners have increased reliance on Russian crude oil.