Indian refiners may soon be left with little choice but to scale back Russian crude purchases if the temporary US waiver is not renewed, as geopolitical tensions linked to Iran continue to roil oil markets.
New Delhi has sought an extension from the United States of the waiver allowing Indian refiners to import Russian oil, Bloomberg reported. The exemption, initially introduced in March, was later extended until May 16 to support additional oil supplies and help contain surging crude prices.
The US administration has not confirmed if the exemption for buyers, including India, will continue after May 16. Should the waiver expire, domestic refiners could face the prospect of sourcing more expensive crude from the spot market elsewhere.
Dependent on imports for almost nine-tenths of its oil consumption, India found a cost-effective partner in Russia following the conflict in Ukraine. Affordable crude purchases played a crucial role in limiting energy costs, but US-led pressure and tariff actions are increasingly putting those discounted flows at risk.
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India's Russian Oil Dependence: Daily Imports And Potential Post-May 16 Shortfall
Data from Kpler shows India's purchases of Russian crude have hit a record 2.3 million barrels a day this month, supported by the continued import of cargoes under the sanctions waiver. If additional Russian tankers are not routed to India, flows could moderate to 1.9 million barrels daily for the month as a whole.
How The Iran War Affected Oil Purchases
Global crude markets have been rattled by the Iran war, which disrupted significant oil supplies moving from the Persian Gulf to major importers, including India. In a bid to curb spiralling prices, the US introduced a special waiver for India on March 5, permitting refiners to purchase stranded Russian cargoes. The relaxation was expanded worldwide a week later and, after being extended once, is set to lapse on May 16.
Indian Oil and Bharat Petroleum, the country's two biggest public-sector refiners, snapped up crude cargoes from the US and West Africa this week ahead of the looming waiver expiry, according to the ET report. The shipments are expected to load within the current month.
Bharat Petroleum is exploring temporary supply arrangements for Azeri and African crude varieties in a move aimed at cutting its dependence on Persian Gulf oil, the report added.
The US sanctions targeting Russian oil formed part of Washington's strategy to tighten economic pressure on Russia over the Ukraine war. The subsequent relaxation highlights the difficult balancing act facing the Trump administration amid its military campaign against Tehran, a conflict that has all but halted oil flows through the Strait of Hormuz since February.
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