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A US waiver allowing India to buy Russian oil that is already at sea will bring immediate but very limited relief to Indian refiners facing a supply shock in the Middle East, which accounts for nearly half their country’s crude imports.
Washington announced last week it was granting New Delhi a month-long exemption to buy Russian crude that was loaded on vessels before March 5, a move analysts at Nomura said could make available 20mn to 30mn barrels of oil to India.
The available crude was a “drop in the ocean” equivalent to only four days’ of Indian demand and so would be “helpful, but not a game-changer”, they wrote in a research note.
Data intelligence company Energy Aspects said it estimated India bought about 20mn barrels of Russia’s “on-water” crude immediately after the US announced the temporary waiver.
The buying “materially helps clear Russian crude and delays deeper upstream shut-ins”, but the US waiver would “do little to offset the global supply shock”, Energy Aspects said.
US President Donald Trump imposed a 25 per cent additional tariff on Indian imports in August, alleging that New Delhi’s oil purchases were helping to finance Moscow’s war in Ukraine.
Trump last month agreed to drop the tariffs, saying New Delhi had agreed to “stop buying Russian oil”. India has always said its strategy was to diversify supply in line with market conditions.
Analysts said access to the Russian shipments would do little to ease the hit to India, which is one of the world’s largest importers of crude, from higher oil prices. The cost of a barrel of Brent crude oil jumped to as high as $119 at one point on Monday.
India depends on imports for 90 per cent of its oil and natural gas needs, and bought crude worth $100bn between April and January.
Premasish Das, S&P Global’s head of Asia and the Middle East oil markets research, said the US waiver did not materially offset the risks to India’s oil supply because the flows of crude through the vital Strait of Hormuz remained almost blocked.
“This waiver is a short‑term, tactical move to prevent disruption and calm markets and not a policy shift or a meaningful supply boost for the global market,” Das said.
Shares in Indian oil refiners have slumped, with the government-owned three main refiners all tumbling more than 4 per cent on Monday, as global oil prices soared and shipping was almost halted through the Strait of Hormuz, which accounts for 40 per cent of New Delhi’s crude imports.
The share price of the largest domestic refiner, Indian Oil, has fallen about 15 per cent since the conflict began.
India’s strategic reserves cover about eight weeks of imports. Drawing on these stocks would “buy policymakers time to respond to a severe price shock”, said Shilan Shah of Capital Economics, but would not “insulate the economy from a prolonged conflict”.
Anindya Banerjee, head of commodity research at Kotak Securities in Mumbai, said concerted action was needed by the world’s major powers to boost the flow of oil into the world market.
“The price will continue to rise and you might get the barrels, but it will come at a substantial premium,” Banerjee said.
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