Indian refiners, led by Indian Oil Corp. Ltd. are rushing to secure millions of barrels of prompt Russian crude as New Delhi scrambles to mitigate an energy crisis triggered by an escalating Iran war in the Middle East.
The refiners are pivoting back to Moscow’s barrels after US Treasury Department issued a surprise 30-day waiver on Thursday, according to a Reuters report that quoted at least six people aware of the matter. The temporary licence allows India to purchase Russian oil currently “stranded at sea”, providing a critical lifeline as traditional Gulf supply routes face disruption.
A Strategic Pivot under Pressure
The waiver represents a temporary thaw in a months-long campaign by Washington to pressure New Delhi into diversifying away from Russian energy. India, which became the top buyer of Russian sea-borne crude following the 2022 invasion of Ukraine, had significantly scaled back purchases in January to comply with US interests.
That reduction helped New Delhi avoid 25% tariffs and secure an interim trade deal with the United States. However, the volatility in the Middle East—where India sources approximately 40% of its imports via the Strait of Hormuz—has forced a tactical shift.
“To enable oil to keep flowing into the global market, the Treasury Department is issuing a temporary 30-day waiver,” said Treasury Secretary Scott Bessent in a statement. He characterised the move as a “stopgap measure”, noting that it authorises only transactions involving oil already at sea to prevent a significant financial windfall for Moscow.
Refiners Return to the Market
India’s energy security remains precarious, with domestic crude stocks covering only about 25 days of demand. Fearing a shortage, state refiners including Indian Oil, Bharat Petroleum Corp. Ltd., Hindustan Petroleum Corp. Ltd., and Mangalore Refinery and Petrochemicals Ltd. have re-entered talks with traders for prompt delivery.
Sources told Reuters that state-run refiners have already snapped up approximately 20 million barrels of Russian oil. Even Reliance Industries Ltd., India’s largest private refiner, has reportedly approached traders for prompt Russian cargoes.
“Indian refiners are back in the market,” said one trader involved in the sales. “Nowadays, more than prices, availability of molecules is the issue.”
The Cost of Urgency
The desperation for supply has fundamentally altered the economics of the trade. Traders are currently selling Russian Urals to India at a premium of $4 to $5 per barrel relative to Brent on a delivered basis for March and April arrivals.
This marks a dramatic swing from February, when cargoes traded at a $13 discount. For comparison, HPCL secured two cargoes at that $13 discount just before the regional conflict intensified on February 28.
Washington’s Long-Term Outlook
While the Trump administration has granted this reprieve following direct outreach from New Delhi, the long-term expectations in Washington remain unchanged. Secretary Bessent noted that the US expects India to eventually transition toward higher volumes of US oil.
For now, however, the priority remains stabilising a market rattled by the Iran conflict. Neither the Indian ministries nor the US White House responded to Reuters’ requests for comment, but the movement of vessels suggests that for India, the immediate need for “molecules” has outweighed the previous diplomatic caution.