The United States told its European allies that any further loosening of sanctions on Russian oil will likely focus on supplies to India. Officials see this approach as a temporary way to stabilize the global oil market amid an energy crisis.
Reasons for possible loosening
Bloomberg reported on the U.S. approach. According to the outlet, American authorities are trying to curb the sharp rise in oil prices. Prices increased after the escalation of the conflict in the Middle East. Disruptions in regional oil supplies created a risk of shortages on the global market.
Because of this, the U.S. administration has already allowed India to temporarily buy Russian oil that was on tankers at sea. The decision should help partially offset the supply shortage and stabilize global deliveries.
On March 9, during a phone call between finance ministers of the Group of Seven countries, the U.S. stressed that the decision regarding India was “very much contained both in terms of time and scope of the measures.”
“They do not expect substantial impact of this on Russian oil revenues,” said European Union Economy Commissioner Valdis Dombrovskis.
At the same time, officials in Washington emphasize that any further sanctions relief will remain limited. It does not mean the U.S. will fully revise its policy toward Russian oil. According to officials, potential exemptions will mainly concern supplies to India.
Oil prices
Oil production cuts in the Middle East are deepening. The reason is that the key waterway through the Strait of Hormuz is almost completely non-operational. Because of the closure on Monday, oil prices reached $120 per barrel.
On March 9, Donald Trump said the U.S. and Israel are making significant progress in the war against Iran. According to him, they could end the conflict “very soon,” which helped restrain further oil price growth.
However, as the war drags on, the Group of Seven countries said they are ready to release strategic oil reserves if necessary.
India’s role in the oil market
India became one of the largest buyers of Russian oil after the start of Russia’s full-scale war against Ukraine. This happened after the Group of Seven introduced a price cap that limits the Kremlin’s revenues from energy exports while allowing stable supplies to the global market.
After the escalation in the Middle East, India faced the risk of supply disruptions because a large share of its oil imports passes through the Strait of Hormuz. Therefore, Washington is considering partial sanctions exemptions to prevent a sharp spike in energy prices.
Earlier, The Ukrainian Review reported that global oil prices crossed the $100-per-barrel mark for the first time since 2022 amid the escalation of the conflict between the U.S., Israel and Iran. U.S. President Donald Trump called the price surge “a small price” for eliminating the nuclear threat from Tehran.
