US extends Russian crude lifeline while closing the door on Iran

The US Treasury has executed a notable policy reversal, extending the sanctions waiver for Russian crude sold to Indian refiners by two weeks until mid-May, potentially giving a glimpse of post-war buying attitudes from Indian buyers as well.

Key Takeaways:

• The US Treasury has extended the sanctions waiver for Russian crude to Indian refiners until mid-May, yielding to buyer pressure to replace lost Middle Eastern barrels.
• Washington did not renew the one-month general license for Iranian oil, permanently closing the purchasing window on Sunday, 19 April.
• Indian demand for Russian Urals remains unrelenting, pushing May-arrival premiums to ICE Brent to around $6/bbl.

This shift underscores the immense pressure exerted by Indian importers, who are aggressively seeking alternative barrels to replace disrupted Middle Eastern supplies following the closure of the Strait of Hormuz. This comes as the US energy secretary said last week that the broad sanctions waivers for Russian oil would not be extended.

Alongside this, the Office of Foreign Assets Control (OFAC) extended special operation permits for Serbia's NIS and Croatia's Janaf until 16 June, while granting Russia's Gazprom until 22 May to finalize the sale of its stake in NIS to Hungary's Mol.

In stark contrast, Washington held firm on Tehran, refusing to renew the temporary general license for Iranian crude. That window firmly closed on Sunday, 19 April. Prior to the deadline, Indian refiners capitalized on the brief opening to secure Iranian cargoes. To circumvent broader financial restrictions, these purchases, including one VLCC, were settled in Chinese yuan via an Indian bank.

This indirectly placing the buying scrutiny on China’s independent refiners. These refiners have also not materially increased imports, balancing pressure from Beijing to keep running hard with the realities of higher Iranian oil prices and crimped refining margins.

Russia crude oil in transit by current location, Mbbls

Source: Kpler

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