Why the US says India should purchase Russian oil once more | EUROtoday

The Trump administration’s determination to ease sanctions on Russian oil gross sales to India as a way to tackle potential provide points has raised questions on Washington’s resolve on the difficulty.

When President Trump and Indian Prime Minister Narendra Modi introduced a commerce settlement final month, a serious part of the deal was India agreeing to cease buying Russian oil. Trump had repeatedly criticized India’s purchases of the hydrocarbon from Moscow.

However, in a serious coverage shift, the US introduced on Thursday (March 5) a 30-day waiver to permit Indian refiners to purchase Russian oil once more.

“India is an essential partner of the United States, and we fully anticipate that New Delhi will ramp up purchases of US oil. This stop-gap measure will alleviate pressure caused by Iran’s attempt to take global energy hostage,” US Treasury Secretary Scott Bessent stated on social media.

Why has the US made this coverage shift?

Global oil costs have surged within the wake of the US and Israeli assaults on Iran, with provides drying up through the strategically very important Strait of Hormuz and with oil manufacturing disrupted throughout the area.

Given India’s standing because the world’s third-largest crude importer, the US says it’s attempting to alleviate provide and value pressures by permitting it to renew purchases of Russian oil already accessible on the worldwide market.

The short-term license given to Indian refiners covers Russian crude oil and petroleum merchandise already loaded onto vessels earlier than March 5, as long as they’re delivered to India and bought by an Indian firm.

“The US government is simply looking for quick fixes to the global oil price issue,” Ben Hilgenstock, a specialist on sanctions towards Russia with the Kyiv School of Economics, informed DW. “The Russian oil that is already floating around is obviously a prime candidate for that.”

Bessent added in his assertion that the “temporary” measure would assist India with out considerably boosting the Kremlin. “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,” he stated.

Is this a giant deal for India?

Before the Russian invasion of Ukraine in 2022, India was not a big purchaser of Russian oil. However, it ramped up purchases when Russian oil turned less expensive on worldwide markets than the alternate options.

However, New Delhi agreed to drag again from these purchases earlier this 12 months amid sustained strain from the Trump administration. Hilgenstock says that call was made simpler by the truth that, on the time, world oil costs have been low and India might nonetheless supply comparatively low cost choices apart from from Russia.

“The Trump administration was able to do this because the oil market was in a very different situation,” says Hilgenstock. “And they will be able to do this again after the Iran issue is over, whenever that may be, because the oil market fundamentally is still in a very different situation.”

However, the transfer is probably going to offer aid for Indian refiners. India is susceptible to provide shocks and value hikes. Its crude shares sometimes cowl lower than a month of demand, with refineries additionally holding restricted inventories of different petroleum merchandise.

“It’s a saving grace for Indian refineries,” Carole Nakhle, CEO of UK-based power consultancy Crystol Energy, informed DW. “It’s not that they have reduced their purchases to zero, but they were looking for other sources of supply. It helps Indian buyers who were buying Russian oil.”

Although India’s oil minister Hardeep Singh Puri stated this week the nation was well-stocked regardless of “short-term disruptions arising from the Middle East”, round half of the nation’s crude imports come by the Strait of Hormuz.

Indian refiners and the federal government had been contemplating a variety of emergency measures to cope with attainable provide shortages. Russia had already directed extra cargoes in direction of Indian waters in anticipation of a attainable reprieve.

Hilgenstock says the transfer is prone to decrease costs and that it’d as effectively be Indian consumers benefiting from that, given its significance as a crude import market.

“Everyone is having issues with supplies coming from Saudi Arabia, the UAE, Kuwait and Iraq. Someone would have bought this oil anyway. And if it decreases the global price a little bit, then why not?”

Has India actually stopped buying Russian oil?

Since the US dropped tariffs on India in return for the nation to cease shopping for Russian oil in early February, Indian refiners had diminished purchases from Russia by round half from the height in June 2025. A unbroken decline in purchases was anticipated earlier than the US and Israeli bombing of Iran started.

India changed that oil with purchases from the Middle East, particularly from Kuwait, Qatar, Saudi Arabia and the United Arab Emirates.

Will the reprieve assist Russia?

If the 30-day reprieve will not be prolonged, it is unlikely to make a lot materials distinction for Russia, analysts say.

Both Hilgenstock and Nakhle say that different nations, akin to China or others in Asia, would have possible bought the oil anyway, and that now it’s merely headed for India as an alternative.

“The ultimate question is how long this is going to take,” says Hilgenstock. “If it’s a month or two, it’s fine. It gives Russia some breathing space, but it doesn’t solve any of the fundamental issues that they have.”

Russia’s power revenues fell by round 20% in 2024 as low oil costs and growing sanctions, notably from the US on Russian oil majors Rosneft and Lukoil, took their toll. The sanctions have meant an ever widening low cost on Russian oil on world markets for the nations that do buy it.

Hilgenstock says that earlier than the Iran assaults started, the scenario for Russian oil was bleak, with its benchmark promoting for as little as $30 a barrel. “That’s very, very bad,” he stated.

While Russia could profit quickly from provide and value shocks brought on by the battle within the Middle East, he expects market fundamentals to be restored as quickly as the present battle ends — notably if sanctions stay in place.

However, Hilgenstock stated it was additionally vital to keep in mind that the urge for food for sanctions — from the US or in any other case — was solely going to be as sturdy as market situations would permit.

“Every time there is trouble in the market, they go back on their promises and loosen restrictions —  that argument can certainly be made,” he stated.

Edited by: Andreas Becker