US issues 30-day sanctions waiver for purchase of Russian oil at sea
A view shows oil pump jacks outside Almetyevsk in the Republic of Tatarstan, Russia June 4, 2023. Photo: Reuters
The United States issued a 30-day waiver for countries to buy sanctioned Russian oil and petroleum products currently stranded at sea, in what Treasury Secretary Scott Bessent said was a step to stabilise global energy markets roiled by the Iran war.
Oil prices eased on Friday morning in Asia after the US waiver announcement, which, according to Russia's presidential envoy Kirill Dmitriev, would affect 100 million barrels of Russian crude, equal to almost a day's worth of global output.
The move, the second significant rollback of Ukraine war-related US sanctions in just over one week, was the latest attempt by President Donald Trump's administration to tame energy prices after the US and Israeli strikes on Iran paralysed shipping through the Strait of Hormuz.
The 32-nation International Energy Agency said on Thursday that the war in the Middle East was creating the biggest oil supply disruption in history.
Waiver runs till April 11
The licence issued by Washington on Thursday authorizes the delivery and sale of Russian crude oil and petroleum products loaded on vessels on or before March 12 and valid through midnight Washington time on April 11, according to the text of the licence posted on the Treasury Department's website.
The move reflects White House worries that the surge in oil prices after nearly two weeks of US and Israeli strikes on Iran will hurt US businesses and consumers ahead of the November midterm elections, when Trump's fellow Republicans hope to retain control of Congress.
Bessent, in a statement on X released hours after benchmark oil prices shot above $100 a barrel, said the measure was "narrowly tailored" and "short-term" and would not provide significant financial benefit to the Russian government.
President Trump’s energy agenda has resulted in oil and gas production reaching the highest levels ever recorded.
To enable oil to keep flowing into the global market, the Treasury Department is issuing a temporary 30-day waiver to allow Indian refiners to purchase Russian oil.…"The temporary increase in oil prices is a short-term and temporary disruption that will result in a massive benefit to our nation and economy in the long-term," Bessent said in the statement, echoing Trump.
Even as the sanctions reprieve was expected to boost world supplies of oil, it could also complicate the West's efforts to deprive Russia of revenue for its war in Ukraine and put Washington at odds with its allies.
European allies oppose relaxing sanctions on Russia
European Commission President Ursula von der Leyen, after participating in a call with G7 leaders on Wednesday to discuss the impact of the Iran war on oil and gas markets, said now was not the time to relax sanctions against Russia.
British energy department minister Michael Shanks told BBC Radio on Friday that the UK government would not be loosening its sanctions on Russia at all, describing the timing as a "critical moment in the Russian aggression against Ukraine".
The sanctions relief took place after a call between Trump and Russian President Vladimir Putin on March 9 and a subsequent visit to the US by Dmitriev to discuss the current energy crisis with a US delegation that included Trump's special envoy Steve Witkoff and Trump's son-in-law Jared Kushner.
"Against the backdrop of the growing energy crisis, further easing of restrictions on Russian energy supplies appears increasingly inevitable, despite resistance from some Brussels bureaucrats," Dmitriev wrote in a post on the Telegram messaging app on Friday.
Following the announcement from the Treasury, Thailand's Deputy Prime Minister Phipat Ratchakitprakarn said his country was ready to purchase Russian crude and was preparing for talks.
The US Treasury previously issued a 30‑day waiver on March 5 specifically for India, allowing New Delhi to buy Russian oil stuck at sea.
Russia, whose energy revenues halved in the first two months of the year and whose government had already been contemplating a major cut to budget spending this year, stands to benefit from a higher oil price.
Trump has also ordered the US International Development Finance Corporation to provide political risk insurance and financial guarantees for maritime trade in the Gulf and said the US Navy could escort ships in the region.
The Trump administration is considering temporarily waiving a shipping rule known as the Jones Act to ensure that energy and agricultural products can move freely between US ports, the White House said.
"The president is taking every action he can to lower prices... and you're going to see more and more in the days to come," White House Deputy Chief of Staff Stephen Miller told Fox News' 'Primetime' programme on Thursday.