- India has received a 30-day waiver from the United States to buy Russian crude currently stranded at sea.
- US Treasury Secretary said the waiver is intended to ensure oil continues flowing into global markets.
- The waiver primarily addresses immediate crude availability concerns for India.
India has received a 30-day waiver from the United States to buy Russian crude currently stranded at sea. This provides a much-need (but temporary relief) to refiners grappling with supply disruptions triggered by the escalating conflict in the Middle East. The move comes as the Iran war threatens oil flows through the Strait of Hormuz, a critical shipping route that carries a large share of global crude exports and accounts for about 40% of India's oil imports.
US Treasury Secretary Scott Bessent said the waiver is intended to ensure oil continues flowing into global markets amid disruptions linked to the Iran conflict. "This deliberately short-term measure will not provide significant financial benefit to the Russian government as it only authorises transactions involving oil already stranded at sea," Bessent said in a statement posted on social media.
The decision comes as the widening conflict in the Middle East threatens crude flows through the Strait of Hormuz, a key maritime route that handles a significant portion of the region's oil exports. India relies heavily on Gulf suppliers and imports nearly 90% of its crude requirement, leaving it vulnerable to supply shocks.
Industry sources told Reuters that Indian refiners have already begun purchasing prompt cargoes of Russian crude, with around 20 million barrels reportedly bought from traders so far. The temporary waiver could ease short-term supply pressures.
US Waivers Russian Oil Purchase: What Does This Do?
The waiver primarily addresses immediate crude availability concerns for India. The Middle East conflict has disrupted normal tanker movement and raised risks around shipments passing through the Strait of Hormuz. The waterway typically accounts for around 40% of India's oil imports.
Insurance challenges have further complicated shipping. War-risk underwriters began cancelling policies for vessels transiting the strait shortly after the conflict escalated, forcing insurers to reassess coverage for tanker movements in the region.
In this environment, Russian cargoes already on the water provide a near-term alternative supply route. Shipping data suggests more than 30 million barrels of Russian crude are currently afloat, enough to cover roughly six days of India's demand.
US Waivers Russian Oil Purchase: Financial Impact
For a growing economy like India that imports the bulk of its energy needs, higher oil prices quickly translate into a larger import bill. The recent waiver could help limit pressure on India's import bill and current account deficit at a time when crude prices have surged. India's current account deficit, which is 1.2% of its GDP, widens by 50 basis points for every $10/barrel rise in oil price. To compare, Benchmark Brent crude has already climbed to around $83 per barrel, compared with roughly $71 a week ago.
Also, a sustained rise in crude costs can also feed into domestic inflation, raising prices of fuels, transport and eventually food and other essentials. Access to discounted Russian crude in recent years (particularly since Ukraine War) has helped India cushion some of these pressures. Analysts say that if similar discounts persist, the waiver could reduce the financial strain on refiners and the broader economy.
India's crude and condensate imports recently touched a record 5.3 million barrels per day, underscoring the scale of the country's energy demand as the economy continues to expand.
Before the recent disruption, Russian crude had been trading at a significant discount to international benchmarks. Industry data shows the discount had widened to about $12.4 per barrel, compared with roughly $2.5 per barrel in November 2025. The gap widened after Indian refiners temporarily reduced purchases amid US pressure earlier this year, leaving more Russian cargoes available in the spot market. Discounted barrels had previously helped Indian refiners reduce feedstock costs while maintaining strong refining margins. Whether the financial benefit materialises now will depend largely on the discount at which these stranded cargoes are sold.
At present, both state-owned and private refiners are exploring purchases. Indian Oil Corporation, Bharat Petroleum Corporation, Hindustan Petroleum Corporation, and Mangalore Refinery and Petrochemicals are in discussions with traders for prompt Russian cargoes. According to the Reuters report cited above, Reliance Industries resumed imports of Russian crude in February, after pausing purchases earlier in the year. HPCL and MRPL had last received Russian cargoes in November, according to industry shipment data.
Meanwhile, retail fuel prices in India are largely controlled, which means state-owned oil marketing companies cannot always immediately pass on higher input costs. As a result, the current environment is financially challenging for fuel retailers such as IOCL, BPCL and HPCL. Access to discounted Russian crude could partly offset these losses if refiners are able to secure cargoes below prevailing benchmark prices.
India's Diplomacy Dilemma: Oil Math
The waiver also highlights the difficult balance India faces between energy security and geopolitical pressure. New Delhi had earlier reduced Russian oil purchases after Washington imposed tariffs linked to those imports. In fact, the Trump administration said that the tariffs (lowered under the trade deal) on India will be raised again if the country resumes Russian oil purchase.
However, the Iran war has disrupted supply chains from traditional Gulf suppliers, forcing US to reassess risks to global oil supply. Thankfully, Iran's clarification that only the vessels from the US, Israel, and Europe will be blocked while passing through the Strait of Hormuz has given a breather to India. Oil shipment from the route is still dicey as insurers have decided to back-off from providing a financial cushion to vessels passing through the route.
Analysts say India's refining system is already configured to process Russian crude, making it relatively easier to ramp up imports if supply disruptions from the Gulf persist. For now, the US waiver offers temporary relief to refiners and energy markets, though the longer-term trajectory will depend on how the Middle East conflict evolves, India's diplomacy, and whether Russian crude remains available at discounted prices.
On the US issuing a 30-day waiver to allow Indian refiners to purchase Russian oil, Executive Director of the Observer Research Foundation America, Dhruva Jaishankar said, "One common thread amongst all geopolitical conflicts is that commodities will be affected in drastic measures... Energy is chief amongst them, but not the only factor at play. The issue with the commodities market, including energy, is that it is now globally traded. We all look at what the Brent crude figures are on a given day when there's a crisis in the Middle East."
He added, "US has been sanctioning Russia; they create carve-outs for themselves on uranium, on palladium, on things like that, which they can't get from anywhere else. And that is the reality that any, again, large, integrated, sophisticated economy has to deal with... So we're going to see some very unexpected kinds of arrangements being made because, again, even in the height of a conflict, the US is conscious of the global energy market, oil particularly, but gas to some degree..."
