Novel Delhi is moving to secure energy supplies as escalating tensions in the Middle East threaten critical shipping lanes, with Indian refiners already tapping into millions of barrels of Russian crude oil currently positioned offshore. The move comes after the U.S. Issued a 30-day waiver allowing India to resume purchases of Russian oil without facing penalties, a temporary measure designed to stabilize global energy markets amid fears of a wider conflict involving Iran.
The U.S. Government’s decision reflects growing concerns about disruptions to the flow of oil through the Strait of Hormuz, a vital chokepoint for India’s energy imports. Nearly half of India’s crude oil and gas imports transit this narrow Gulf passage, and Tehran has threatened to target vessels attempting to pass through since the conflict with the U.S. And Israel began. The waiver, described as a “deliberate short-term measure” by Treasury Secretary Scott Bessent, authorizes transactions for oil already stranded at sea, aiming to alleviate pressure without providing significant financial benefit to Russia, according to a statement reported by the BBC.
Waiver Follows Prior Restrictions
This recent move represents a shift in U.S. Policy. Previously, Washington had urged India to curtail its purchases of Russian energy in an effort to limit funding for Moscow’s war in Ukraine. In February, President Donald Trump lifted 25% tariffs imposed on Indian purchases of Russian oil, reportedly after receiving assurances from New Delhi that it would reduce its reliance on Russian supplies. Still, the escalating crisis in the Middle East has prompted a reassessment of those priorities. The 30-day waiver is in effect until April 4th, according to the Treasury Department.
The decision to allow Indian purchases of Russian oil is also seen as a boost for Moscow, as its oil export earnings are crucial for financing its ongoing military operations in Ukraine. As reported by the Associated Press, Russia’s Urals blend export price has risen to $70 per barrel, up from below $40 in December, demonstrating the impact of tightening global oil markets.
Supply Concerns Drive Demand
India, the world’s third-largest oil importer and fifth-largest exporter of petroleum products, had been increasingly relying on Middle Eastern supplies to replace Russian crude. However, the current conflict is disrupting those supplies, prompting Indian refiners to once again look to Russia. Energy data tracker Kpler reports that Indian refiners have been actively seeking prompt Russian crude supplies since last weekend, and estimates suggest up to 6-8 million barrels of Russian oil have been purchased over the past few days.
The immediate impact of the conflict was a surge in oil prices. West Texas Intermediate (WTI) oil jumped 8.51%, closing at $81.01 per barrel on Thursday, the largest single-day gain since May 2020. Global benchmark Brent rose 4.93%, settling at $85.41 per barrel. Although both benchmarks experienced a slight decline on Friday, trading at $79.92 and $84.42 respectively, the overall trend indicates heightened volatility and supply concerns.
Strait of Hormuz Remains a Key Concern
The situation highlights the strategic importance of the Strait of Hormuz. Disruptions to shipping through this vital waterway could have severe consequences for India, which has crude oil and gas stocks sufficient for approximately 25 days, according to reports. The U.S. Is also taking steps to mitigate broader risks, including offering political risk insurance for tankers transiting the Gulf, as reported by CNBC.
The U.S. Government has also indicated that the conflict with Iran could last for several weeks, potentially prolonging the pressure on global energy supplies. President Trump has warned the war could stretch on for four to five weeks or longer.
As the situation in the Middle East continues to evolve, the availability and price of oil will remain a key factor. The coming weeks will be critical in determining whether the 30-day waiver will be extended, and what further measures may be necessary to ensure a stable energy supply for India and the global market.
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