On Thursday, March 5, 2026, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) issued a license authorizing the delivery and sale of Russian crude oil and petroleum products to India, but only for oil already loaded onto vessels as of that date. Treasury Secretary Scott Bessent announced the measure on X, framing it as a response to Iran's attempt to 'take global energy hostage.' The waiver is a deliberate and short-term measure that will not provide significant financial benefit to the Russian government as it only authorises transactions involving oil already stranded at sea, Bessent wrote. He added that the exception is being made to ensure that oil can still flow into the world market and ease some of the pressure on the global energy market in connection with the US and Israel's war against Iran.
The backdrop to this decision is a severe disruption in global energy flows. The Strait of Hormuz, through which a fifth of global oil and liquefied gas supplies pass, has remained effectively closed since Iranian forces threatened to 'set fire' to ships passing through. The US-Israel war on Iran and Tehran’s retaliatory attacks across the Gulf region have upended the world’s energy and transport sectors, virtually halting activity in the strait of Hormuz. This closure has stranded significant volumes of oil, including shipments intended for India, which relies heavily on Middle Eastern supplies. In response, Indian refiners, whose supplies were stuck in the Gulf, started buying Russian oil that’s readily available, Reuters reported quoting sources familiar with the matter. At least three sanctioned tankers carrying around 2.1 million barrels of Russian Urals crude were already diverting to Indian ports this week, according to vessel-tracking data.
The U.S. waiver is explicitly limited in scope. It applies only to Russian crude oil and petroleum products that were already loaded onto vessels on or before March 5, 2026, and are stranded at sea. The authorization does not permit new shipments from Russia. Washington has insisted that the new measures are not aimed at easing restrictions on Moscow, imposed over its conduct in negotiations to end the war in Ukraine, but instead only affect supplies already in transit. There is a discrepancy regarding the exact expiry date of this waiver. Some sources report that the waiver expires on 4 April, while the U.S. Treasury states that transactions are authorised through the end of the day on 3 April 2026.
The measure comes amid soaring oil prices and market volatility. Oil surpassed $80 a barrel for the first time in months. The price of crude oil soared 8.5% on Friday and was up nearly 30% for the week after the US president, Donald Trump, said that only the 'unconditional surrender' of Iran would end the Middle East war. In this context, the U.S. action is part of a broader strategy to manage energy market stability. Bessent told Fox Business on Friday that 'We may unsanction other Russian oil,' adding that 'There are hundreds of millions of barrels of sanctioned crude on the water. And in essence, by unsanctioning them, Treasury can create a supply.' He stated, 'We’re going to keep a cadence of announcing measures to bring relief to the market during this conflict,' with high oil prices a pain point both domestically and for international markets. The specific conditions or criteria that must be met for the U.S. to lift sanctions on more Russian oil beyond the current waiver remain unclear.
For India, the waiver offers immediate relief to address domestic supply concerns. India moved to shore up domestic fuel supplies on Thursday, ordering all refiners to maximise production of liquefied petroleum gas and restrict its supply to three state-run companies – Indian Oil, HPCL and BPCL. Refiners were also told not to divert propane and butane to petrochemical production, with state firms instructed to sell LPG to domestic customers only. The U.S. has framed the move as a stopgap measure, as Washington expects India to eventually buy more US oil. Bessent wrote on X that 'India is an essential partner of the United States, and we fully anticipate that New Delhi will ramp up purchases of US oil.' This expectation aligns with recent trade developments; the US reduced tariffs on Indian imports to 18 per cent amid broader trade negotiations, and Bessent had signalled in January that additional tariffs on Indian goods could be removed given what he described as a shared strategic outlook. How this waiver will affect broader US-India trade relations and ongoing negotiations is yet to be seen.
Historically, India's oil import patterns have shown significant shifts. In January this year Russian crude accounted for less than 20 per cent of India's imports, the lowest in nearly four years, while Saudi imports rose to their highest in almost six years. The U.S. had previously said India committed to halting purchases of Russian crude – a claim Indian authorities have not publicly acknowledged. India's official response or stance regarding the U.S. waiver and its commitment to halting Russian oil purchases has not been explicitly stated. Russia, for its part, has welcomed the renewed interest. Russia’s deputy prime minister Alexander Novak told state-run TV that Moscow was 'getting signals of renewed interest from India' in purchasing additional volumes of its crude, adding that it 'remains convinced' the trade is beneficial to both countries. Kremlin economic adviser Kirill Dmitriev said he was discussing the issue with the United States, posting on X that 'Western sanctions have proven detrimental to the world economy.'
The amount of Russian oil currently stranded at sea and available for sale under this waiver is not precisely quantified, though Bessent's reference to 'hundreds of millions of barrels' suggests a substantial volume. The current status of the Strait of Hormuz closure and its impact on global oil supply continues to be a critical unknown, with the strait effectively closed since the threats were issued. The U.S. treasury secretary, Scott Bessent, said on Friday that his government was considering lifting sanctions on more Russian oil, a day after it temporarily authorised India to buy from Moscow as global oil prices surged. This indicates that further measures may be forthcoming as the market situation evolves. The waiver represents a calculated move to balance immediate energy security needs with long-term geopolitical objectives, leveraging existing stranded inventories to mitigate crisis impacts while reinforcing strategic partnerships.