After the US eased sanctions, demand for Russian oil rebounded; India has purchased 60 million barrels of Russian oil.

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The temporary waiver of U.S. sanctions on Russian crude oil is reshaping the landscape of crude procurement in Asia. According to Xinhua News Agency, the U.S. Treasury Department’s Office of Foreign Assets Control issued a general license late on the 12th, announcing the temporary relaxation of sanctions on Russian oil to address the impact of disruptions in the Strait of Hormuz on energy markets.

According to media reports on the 25th, Indian refiners have ordered about 60 million barrels of Russian crude to be delivered in April, marking the highest level of purchases in recent months, partially offsetting the supply gap caused by tensions in the Strait of Hormuz.

The purchase price of these cargoes commands a premium of $5-15 per barrel compared to Brent crude. According to data intelligence company Kpler, the procurement volume is essentially the same as March's but more than doubled compared to February. New Delhi officials anticipate that as long as the disruption in the Strait of Hormuz persists, the U.S. waiver will continue.

Russia has significantly benefited from this rebound in demand. Reports indicate that the Kremlin's crude oil export revenue has risen to its highest level since March 2022.

Waiver Takes Effect, Indian Refiners Return to Russian Oil Market

The U.S. Treasury Department’s waiver allows India to receive Russian oil shipments loaded before March 5 to compensate for the actual supply shortage caused by the effective closure of the Strait of Hormuz. The waiver was later expanded to other countries and updated to allow purchases of crude that was already at sea before March 12.

According to media reports citing sources, refiners including Mangalore Refinery & Petrochemicals Ltd. and Hindustan Mittal Energy Ltd., which had stopped procuring Russian crude since December last year, have returned to the market.

India is highly dependent on oil imports. After the outbreak of the Russia-Ukraine conflict, India began purchasing large volumes of discounted Russian crude in early 2022, becoming a major buyer of Russian oil. However, since the second half of last year, under pressure from the U.S., India sharply reduced its Russian oil purchases, increasing imports from Saudi Arabia and Iraq—in fact, a large share of these shipments subsequently became stranded in the Persian Gulf due to the outbreak of war in the Middle East.

While taking advantage of the Russian oil waiver, Indian refiners are also diversifying their supply sources. According to Kpler data, India pre-ordered around 8 million barrels of Venezuelan crude for April delivery, the highest level since October 2020.

Russian Oil Clearance Accelerates, Iranian Floating Storage Remains High

In sharp contrast to the rapid rebound in Russian oil demand, the flow of Iranian crude remains stalled.

According to Bloomberg’s vessel tracking data, there are about 18 Russian crude tankers with a total of around 13.5 million barrels available for procurement east of the Suez Canal, a clear drop from about 25 vessels and 19 million barrels roughly two weeks ago—the decline covers the newly arrived cargoes from the Suez during that period. Seven of these ships are loaded with Russia’s flagship Urals crude, which is similar in quality to Middle Eastern oil affected by the war.

In contrast, Vortexa Ltd. data indicates that since last Friday’s waiver, Iran’s floating storage has remained stable at around 27 million barrels, with almost no change. Indian state enterprises remain on the sidelines due to obstacles in payment, insurance, and finding compliant vessels.

Vandana Hari, founder of Singapore consultancy Vanda Insights, said: "I expect countries will be more cautious in buying Iranian oil under the U.S. waiver framework compared to Russian oil. There are quality concerns about Iranian crude, as well as issues with payment mechanisms, which are not problematic for Russian oil."

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