America bans cheap oil from Russia and Iran
A major strategic change is currently being seen in the international energy market. The Trump administration of America has decided not to extend its special exemption (sanction waiver) on buying crude oil from Russia and Iran. In the White House briefing, US Treasury Secretary Scott Besant has made it clear that the ‘General License’ issued before March 11 will no longer be renewed.
Companies made best use of ‘waiver window’
In late February, when tension increased near the ‘Strait of Hormuz’ after the American and Israeli attacks on Iran, there was a possibility that the global supply chain would be affected. In such a situation, to keep crude oil prices stable, Washington had relaxed some restrictions in the beginning of March. Indian oil companies made excellent and prompt use of this ‘waiver window’.
According to reports, during this temporary relaxation, Indian refineries greatly strengthened their inventory stock by ordering about 30 million barrels of crude oil from Russia. According to data from intelligence firm Kpler, India’s imports from Russia reached a record high of 1.98 million barrels per day (highest since June 2023) in March. However, this figure fell to 1.57 million barrels per day in April, mainly due to the closure of Nayara Energy’s 400,000 barrel per day refinery for maintenance.
Return of Iranian oil after 7 years
Another big development was seen during this relaxation. As part of its aim to diversify energy sources, India took swift action and successfully imported nearly 4 million barrels of crude oil from Iran for the first time in seven years. Large Crude Carrier (VLCC) tankers named ‘Jaya’ and ‘Felicity’ have landed this important consignment on the east coast (Paradip) and west coast (Sikka) of India. Our leading companies like Indian Oil, Reliance Industries and Bharat Petroleum have shown excellent logistics management and smoothly integrated this supply into their refining systems.
India imports about 90% of its total crude oil consumption and for this it is largely dependent on supplies through the Strait of Hormuz. In the year 2022, when the world distanced itself from Russia after the Ukraine war, India took advantage of huge discounts to meet its energy needs. But last year, after pressure from US President Donald Trump and threats of tariffs, this mathematics started deteriorating. Now with the end of the exemption, Indian oil companies may have to return to expensive options.
Many Asian countries including India and the Philippines had strongly advocated for increasing this exemption, but were not successful. However, India is continuously maintaining dialogue at the diplomatic level. Prime Minister Narendra Modi had an important phone conversation with Trump on Tuesday itself and stressed the importance of keeping the Strait of Hormuz open and completely safe for global trade and energy flows.
Indian market is ready with new options
Even though the relaxation on Russian supplies is ending on Saturday and Iran’s moratorium is ending on Sunday, Indian refineries are ready to deal with any new situation. Market experts believe that there is still scope for ‘targeted relief’ for some selected companies or specific countries in the future. India meets its major crude oil needs through imports, but smart management by the government and oil companies has ensured that despite changes in the global market, the country’s economy and energy supply chain continue to grow without any interruption.
