On Thursday, the U.S. granted temporary approval for the purchase of Russian oil stranded at sea to help stabilize energy markets.
According to U.S. Treasury Secretary Scott Bessent, this is a “narrowly defined, short-term action” that pertains exclusively to oil that is currently in transit.
As of March 12, CNBC reports that around 124 million barrels of oil from Russia remain at sea across 30 sites globally, sufficient for about five to six days of supply.
Bessent remarked, “The short-term rise in oil prices is a temporary and fleeting disruption that will provide substantial advantages to our nation and economy over the long haul.”
Since the onset of the Iran war, oil prices have fluctuated dramatically, with prices approaching nearly $120 per barrel on Monday.
The global benchmark Brent settled above $100 per barrel on Thursday following the declaration by Iran’s new supreme leader Mojtaba Khamenei to maintain the closure of the Strait of Hormuz.
Bessent indicated that the temporary measure will not yield “substantial financial advantages for the Russian government.”
The treasury secretary mentioned that this is due to Moscow’s primary energy revenue coming from taxes levied at the extraction point.
A notice on the Treasury’s website indicated that the exemption would cover Russian crude products loaded onto ships by 12:01 a.m. Eastern time, with purchases permitted until April 11, 12:01 a.m.
Waiver for India
This action follows Washington’s granting of a 30-day waiver to India last Thursday, with Bessent also stating it will not offer significant financial gains to the Russian government “since it only permits transactions involving oil currently stranded at sea.”
In a podcast interview released on Friday, Bessent described it as “unfortunate” that Russia will financially benefit from this decision, “but we hope that it will be for a very short time.”
He clarified that the waiver was issued as “the Russian barrels are already at sea, and it represents a quick supply for Indian refineries.”
Currently, the G7 and the European Union have imposed sanctions on Russian oil due to its 2022 invasion of Ukraine, implementing a price cap of $44.1 per barrel on Russian oil.
The EU has also pledged to end all remaining oil imports from Russia by the close of 2027.
In 2022, then-U.S. President Joe Biden prohibited the importation of Russian oil, liquefied natural gas, and coal into the U.S.
