However, in an unexpected twist, the US Treasury decided to reverse its previous decision and granted another extension for two weeks on the sanctions waiver for Russian crude oil supplies to India’s refineries until mid-May, contrary to the signals issued by authorities only a few days ago.
Importers Apply Strong Pressure
Indian refiners who switched heavily to Russian barrels to offset reduced supplies from the Middle East successfully lobbied Washington for the extension. The waiver helps India secure affordable crude at a time when global oil prices remain elevated due to ongoing tensions in the Strait of Hormuz. After the initial waiver in March, Indian imports of Russian crude jumped sharply by 90 percent from February to March, even as the country’s overall crude imports fell by 15 percent.
Shipping data showed intense competition for Russian cargoes at sea. Several tankers even diverted from China to meet Indian demand. In the first two weeks of March alone, the volume of Russian crude available on the water dropped by more than 20 million barrels.
Middle East Tensions Drive Demand
Moving forward from mere temporary respite to dealing with some bigger issues, the extended period will help Indian refiners breathe easy amidst continued uncertainties in the Middle East.
India requires cheap Russian crude oil to make the refining process more efficient and affordable. Refining firms are expected to maintain aggressive buying strategies until the waivers continue to be in effect. The fact that the latest extension only lasted two weeks points to the temporary nature of the situation.
It reflects the tough call that US policymakers face as they try to exert pressure on Russia without jeopardizing the oil trade of friendly nations such as India.
