Weeks after removing a 25% tariff penalty on India for buying Russian energy, the Trump administration has issued New Delhi a 30-day waiver allowing refiners to purchase Russian oil.
The measure, which US Treasury Secretary Scott Bessent announced, is expected to help stabilise global energy markets following US-Israeli strikes on Iran.
“To enable oil to keep flowing into the global market, the Treasury Department is issuing a temporary 30-day waiver to allow Indian refiners to purchase Russian oil. This deliberately short-term measure will not provide significant financial benefit to the Russian government as it only authorizes transactions involving oil already stranded at sea,” Bessent said in a post on X on Thursday. He added that Washington expects India to ramp up purchases of US oil. “This stop-gap measure will alleviate pressure caused by Iran’s attempt to take global energy hostage.”
The Trump administration’s decision was likely motivated by fears that the conflict with Iran would drive up global energy prices and stoke inflation within the US. The Dow Jones Industrial Average fell by nearly 800 points on Thursday, amid widespread concerns.
Maintaining economic stability remains a top priority for the Trump administration, especially as it heads into the midterm elections this year. The Republican Party is widely expected to lose control of the House of Representatives, America’s lower House, which could prove damaging to President Trump.
Indian refiners were forced to curtail relationships with Russian suppliers earlier last year after the US Treasury Department unveiled sanctions against energy giants Rosneft and Lukoil. According to the Centre for Research on Energy and Clean Air, India’s crude oil purchases from Russia fell 12% in January compared to December.
Last month, India and the US announced a trade framework. Washington cut tariffs on goods from India to 18%. In exchange, US goods would receive greater market access in industrial and agricultural sectors. India expressed its intent to purchase $500 billion in goods from the US over five years. The Trump administration asserted that India had committed to cease oil purchases from Russia as part of its agreement.
The reversal in the US position on India’s Russian oil purchases comes amid escalating conflict in West Asia. Military hostilities between Iran, the US, and Israel have sparked significant fears that global shipping, including energy supplies, will be disrupted.
Maritime traffic through the Strait of Hormuz, a major international shipping corridor, has dropped sharply since the conflict began last week. A disruption to energy shipments from West Asia holds significant ramifications for India, which imports over 80% of its crude oil needs from foreign sources. A significant share of those imports comes from West Asian suppliers like Saudi Arabia and Iraq.