Oil Prices Ease Slightly After U.S. Allows 30-Day Purchase Window For Russian Oil In Transit

Global crude oil prices traded slightly lower after the U.S. Department of the Treasury announced a temporary 30-day authorization allowing countries to purchase Russian oil that is currently stranded at sea, according to official statements and market data reported by Reuters.

The move allows buyers to purchase Russian-origin crude oil and petroleum products already loaded on vessels before 12:01 am Eastern Daylight Time on March 12, according to the Office of Foreign Assets Control, which administers U.S. sanctions.

At 7:15 AM, global benchmark Brent crude was trading at $99.99 per barrel, down 0.47%, while West Texas Intermediate crude declined 0.67% to $95.09 per barrel, according to market data cited by Reuters.

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U.S. Announces Temporary Oil Waiver

The waiver was announced by Scott Bessent, Secretary of the U.S. Treasury, who said the authorization was intended to increase the availability of global oil supply in the short term.

In a statement posted on X, Bessent said the temporary authorization permits countries to purchase Russian oil already in transit, including cargo on sanctioned vessels. He stated that the measure applies only to shipments already loaded before the specified deadline and is designed to prevent disruptions to global supply.

According to the Treasury Department, the waiver is narrowly limited to oil cargo already transported at sea and does not apply to new shipments from Russia.

Strait Of Hormuz Tensions Continue

The market response came amid continued geopolitical tensions in West Asia. Mojtaba Khamenei, Iran’s Supreme Leader, stated that the country would continue blocking the Strait of Hormuz, a key global oil transit route.

The Strait of Hormuz handles roughly 20% of global oil trade, making disruptions in the area a major factor affecting international energy markets, according to data cited by Reuters.

The US has also announced the release of 172 million barrels of crude oil from its strategic reserve. The International Energy Agency has also coordinated the release of 400 million barrels of crude oil from the reserve of the member countries to stabilize the crude oil supply.

Production Disruptions In The Region

A report by S&P Global said disruptions initially linked to shipping through the Strait of Hormuz are beginning to affect oil production in some West Asian countries.

According to the report, Iraq has reduced output by about 2 million barrels per day due to storage limitations. Production in Iraq’s southern oil fields has declined from around 3.3 million barrels per day to 1.3 million barrels per day, the report said.

The report also noted that Kuwait has curtailed some production as storage facilities fill up amid shipping disruptions.

Impact On India’s Energy Imports

The developments are being closely monitored in India, which imports almost 90% of its crude oil requirements. The figure has been estimated by the government and reported by Reuters. 

A rise in the prices of crude oil by an average of $1 per barrel can increase India’s import bills by almost ₹16,000 crore. The increase in prices will impact India’s current account balance and inflation rates. 

The recent issues in the shipping sector have also started impacting India. There have been reports that some restaurants and food outlets have experienced difficulties in procuring commercial liquefied petroleum gas cylinders. The prices of crude oil can affect the prices of transportation fuel, fertilizers, or even cooking gas. The recent events taking place in the global crude oil market can affect India.