Even as the world economy reels under the global oil supply shock, the Donald Trump administration has reportedly made it clear to European countries that any easing on Russian crude oil sanctions would be related to supplies to India. On Monday, President Donald Trump indicated that Washington might consider lifting ‘certain oil-related sanctions’ in order to help bring down prices. However, he did not elaborate on the proposal, apart from noting that the matter had come up during a phone conversation with Russian President Vladimir Putin earlier that day. According to a Bloomberg report, the United States has informed its European partners that any additional easing of sanctions on Russian crude would largely be confined to shipments destined for India. Oil prices have been climbing since the start of the US-Israel-Iran war. The message comes at a time when India has stepped up its purchases of Russian crude oil as supplies from the Middle East are stuck due to the Strait of Hormuz closure.
India’s Russian Crude Oil Buys
The US claims it has provided a waiver to India to get Russian oil cargoes that were already in transit. India on its part has said that it never stopped buying Russian crude oil and doesn’t need ‘permission’ from anyone to take decisions related to its energy security.India has continued purchasing crude oil from Russia and has not halted such imports, despite US President Donald Trump linking the removal of a proposed 25 per cent penalty tariff under a potential trade agreement to New Delhi allegedly committing to stop buying Russian crude.Officials told TOI that India has never required approval from any country to procure oil from Russia, noting that Moscow remained the country’s largest supplier of crude in February. They emphasised that India’s decisions regarding energy procurement are guided by the principle of “national interest.” “We source crude from wherever supplies are available, competitively priced and deliverable, and we will continue to do so,” a government source said according to a TOI report.Sources also said that the announcement by senior US officials of a “30-day waiver” allowing India to import Russian oil was primarily intended for their domestic audience.During a conference call held Monday among finance ministers of the Group of Seven nations, the United States underscored that the decision concerning India was strictly limited in both duration and scope, said European Union Economy Commissioner Valdis Dombrovskis.“They do not expect substantial impact of this on Russian oil revenues,” Dombrovskis said at a press conference later that evening after participating in the G-7 discussion.People familiar with the deliberations added that US officials stressed any further sanction relief would likely follow the same narrow and carefully defined approach. They also noted that the final decision ultimately rests with Trump.Meanwhile, oil output reductions across the Middle East are intensifying as activity in the strategically vital Strait of Hormuz has slowed almost to a halt. The disruption pushed crude prices close to $120 per barrel on Monday.Trump said the same day that the United States and Israel were making meaningful progress in their military campaign against Iran and that the conflict could conclude “very soon,” a development that helped temper the earlier surge in oil prices.Nevertheless, as hostilities continue, the G-7 countries said on Monday they remain prepared to release oil from their strategic reserves if required. Some member states, however, believe the situation has not yet reached the threshold necessary for such a step, according to people familiar with the matter.