India may get a crude hit from Trump's curbs on Russian & Iranian oil buying freedom

The United States will not be renewing sanctions waivers that previously allowed countries, including India, to import oil from Russia and Iran without risking US penalties. The decision is expected to tighten crude supply for Indian refiners.

US Treasury Secretary Scott Bessent said at a White House briefing on Wednesday, "We will not be renewing the general license on Russian oil, and we will not be renewing the general license on Iranian oil. That was oil that was on the water prior to March 11. So all that has been used.”

The Trump administration previously issued temporary waivers authorizing purchases of some otherwise-sanctioned Russian and Iranian crude already loaded onto ships. But, the waiver on Russian supplies expired Saturday, the Iranian authorization is due to lapse Sunday, and Trump administration officials previously said neither are likely to be reissued.

ALSO READ: US ends sanctions waiver for Russian, Iranian Oil; India among affected buyers

The waiver had allowed Indian refiners to buy Russian crude at a time when the import-dependent, price-sensitive country was facing disruptions in global energy flows after US and Israeli strikes on Iran began at the end of February.

Crude watch

Indian refiners will be closely watching the move. After the temporary exemptions, Indian refiners placed orders for around 30 million barrels of Russian oil during the period, as per The Times of India. Major refiners had earlier scaled back purchases from Russian firms such as Rosneft and Lukoil following sanctions.

ALSO READ: Iranian oil arrives in India just ahead of US waiver expiry

India’s imports from Russia averaged 1.98 million barrels a day in March, the highest since June 2023, according to data from intelligence firm Kpler. The figure dipped in April to an average of 1.57 million barrels a day — but that was largely because Nayara Energy’s 400,000 barrel-a-day refinery, which runs largely on Russian crude, was shut down for maintenance.

“India is grabbing all the Russian crude it can get its hands on,” Vandana Hari, founder of Singapore consultancy Vanda Insights, told Bloomberg before the waiver expired.

India’s Russian oil powerplay

The world’s third-largest oil importer went from taking only a fraction of its crude from Russia to becoming the largest seaborne buyer after the invasion of Ukraine in 2022, as India seized on prices that became heavily discounted as others pulled away. That all changed last year, when US President Donald Trump began applying pressure on India to stop, introducing punitive tariffs and finally sanctioning Moscow’s top two producers.

US and Israeli strikes on Iran and the subsequent closure of the Strait of Hormuz again changed that calculus for all sides. Washington was eager to dampen oil prices, while India was rushing to secure supply. A first waiver allowing Russian oil purchases was issued in early March, and that was widened and extended.

After the first waiver, India bought about 60 million barrels for delivery this month.

Russian crude had been building up on water in the later half of last year, as India stayed away for fear of incurring more opprobrium and tariffs from Washington. Volumes reached a peak in early January at around 155 million barrels, according to data intelligence firm Vortexa, compared to around 93.2 million in the middle of last year.

That figure is now at 100 million barrels on water — a number that may include cargoes that already have buyers — close to what was last seen a year ago.

Since the six-week war in the Persian Gulf began India, which imports about 90% of its crude and depends on flows through Hormuz, has faced shortages, surging prices and the prosepct of slower growth. It has also struggled to secure liquefied natural gas, a commodity Russia has been offering to Asian buyers, despite lingering sanctions. The shipments were being offered at a 40% discount to spot prices last week.

Iranian oil in India after years

Around 4 million barrels of Iranian oil arrived in India, marking the first such imports in seven years as the country moved quickly to secure supplies. India had said earlier this month that it would take crude from Iran, among other suppliers.

The Jaya, a very-large crude carrier fully laden with Iranian crude, is discharging its cargo at Paradip on India’s east coast this week, according to people familiar with the matter and ship-tracking data from intelligence firms Kpler and Vortexa.

The Felicity is doing the same at Sikka, on the west coast. The two US-sanctioned tankers are expected to depart India by Friday, according to port reports reviewed by Bloomberg News.

Indian Oil Corp. runs operations that use Paradip for crude deliveries. Reliance Industries Ltd. uses Sikka, as does Bharat Petroleum Corp., which runs a single-point mooring facility in the area.

What’s next?

India, Philippines and several other Asian countries, had unsuccessfully lobbied the US to extend the Russian waiver before its expiration.

Even so, there’s still an opportunity for targeted relief that applies to certain companies or is designed to aid individual countries, as per Bloomberg. Prime Minister Narendra Modi said he pressed US President Donald Trump on the importance of keeping the strait open and secure during a Tuesday phone call. Bessent did not address the prospect for limited waivers on Wednesday.

While threats from Iran had chilled oil and other cargo traffic through the strait since the start of the US and Israeli strikes in February, now a US blockade of the waterway threatens to pull more crude supplies from the world market.

(With inputs from Bloomberg)