Indian refiners, led by Indian Oil Corporation Ltd., are rushing to secure millions of barrels of Russian crude as New Delhi struggles to ease an energy crisis caused by the escalating Iran war in the Middle East.
Refiners are turning back to Moscow barrels after the US Treasury Department issued a surprise 30-day waiver on Thursday, according to a Reuters report citing at least six people with knowledge of the matter. The temporary license allows India to buy Russian oil currently “stranded at sea”, providing a vital lifeline as traditional Gulf supply routes face disruption.
A strategic pivot under pressure
The waiver represents a temporary letdown in a months-long campaign by Washington to pressure New Delhi to diversify away from Russian energy. India, which became the top buyer of Russian seaborne crude after the 2022 invasion of Ukraine, had significantly reduced purchases in January to comply with US interests.
That cut helped New Delhi avoid 25% tariffs and secure an interim trade deal with the United States. However, instability in the Middle East – where India routes about 40% of its imports through the Strait of Hormuz – has forced a strategic shift.
“To keep oil flowing into global markets, the Treasury Department is issuing a temporary 30-day waiver,” Treasury Secretary Scott Besant said in a statement. He described the move as a “stopgap measure”, noting that it authorized transactions involving oil already at sea to prevent a significant financial windfall for Moscow.
Refiners returned to the market
India’s energy security remains uncertain, with domestic crude oil stocks meeting only 25 days’ demand. Fearing shortages, state refiners including Indian Oil, Bharat Petroleum Corporation Ltd, Hindustan Petroleum Corporation Ltd and Mangalore Refinery and Petrochemicals Ltd have resumed talks with traders for prompt delivery.
State refiners have already extracted about 20 million barrels of Russian oil, sources told Reuters. Even Reliance Industries Ltd, India’s largest private refiner, has reportedly approached traders for expedited Russian cargoes.
“Indian refineries are back in the market,” said a trader involved in sales. “Nowadays, more than prices, availability of molecules is the issue.”
price of urgency
The desperation to supply has fundamentally changed the economics of trade. Traders are currently selling Russian Urals to India at a premium of $4 to $5 per barrel relative to Brent, depending on deliveries for March and April arrivals.
This marks a dramatic turnaround from February, when Cargo traded at a $13 discount. For comparison, HPCL acquired two cargoes at a discount of $13 just before the regional conflict intensified on February 28.
Washington’s long-term outlook
Although the Trump administration has given this relief after direct contact with New Delhi, long-term expectations in Washington remain unchanged. Secretary Besant said that the US hoped that India would eventually move towards greater quantities of American oil.
However, the priority right now remains to stabilize the market which has been troubled by the Iran conflict. Neither Indian ministries nor the US White House responded to Reuters requests for comment, but the movement of the ships suggests that for India, the urgent need for “molecules” outweighs previous diplomatic caution.