Indian refiners, led by Indian Oil Corp., are quickly securing Russian crude oil as tensions rise due to the conflict in Iran. This rush comes after the U.S. Treasury gave a 30-day waiver, allowing India to buy Russian oil stranded at sea, which is crucial as Middle Eastern supply routes face disruptions.
This waiver is a significant change in the U.S. policy aimed at encouraging India to reduce its dependence on Russian energy. Since the Russian invasion of Ukraine, India has become a major buyer of Russian oil but had recently lowered its purchases to align with U.S. interests.
India sources about 40% of its oil from the Middle East, and the recent chaos has driven a shift back to Russian options. “To enable oil to keep flowing into the global market, this waiver is a stopgap measure,” said Treasury Secretary Scott Bessent. It specifically allows trading of oil that’s already at sea, preventing significant financial gains for Russia.
India’s energy security is at risk. Current domestic crude stocks are only enough for about 25 days of demand. To address this, state refiners like Bharat Petroleum and Hindustan Petroleum are negotiating for immediate deliveries. Reports suggest that they have already procured around 20 million barrels of Russian oil. Even Reliance Industries, India’s biggest private refiner, is seeking quick shipments from Russian suppliers.
“Availability of oil is now more important than price,” noted a trader involved in these sales. As urgency grows, the cost has changed significantly. Russian Urals are now priced at a premium of $4 to $5 per barrel compared to Brent oil for March and April deliveries, a stark contrast to a $13 discount seen just a month ago.
While this waiver shows flexibility from the U.S., long-term plans remain focused on shifting India toward greater imports of U.S. oil. For now, however, the immediate need for oil seems to outweigh previous diplomatic concerns, making swift access to supplies a priority. Industry experts see this as a critical moment for India’s energy future amidst fluctuating global markets.
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