Context:
The United States has extended the sanctions waiver that allows purchases of Russian crude oil through sanctioned Russian entities. The move is aimed at preventing supply shocks and keeping global oil prices stable amid geopolitical tensions and risks to major oil routes.
- Meaning of sanctions: Sanctions are restrictive measures imposed by one country or group of countries to pressure another country, entity or individual. They may include bans on trade, finance, banking, shipping, insurance, technology transfer or energy purchases.
- US sanctions on Russian oil: After the Russia–Ukraine war, the US and its allies-imposed sanctions to reduce Russia’s energy revenue. Restrictions targeted Russian oil trade, shipping, insurance, payments and entities involved in crude exports.
- Why waivers are given: A sanctions waiver is a temporary relaxation that allows certain transactions despite sanctions. In this case, the waiver allows Russian crude already loaded on tankers to reach markets, preventing sudden supply disruption.
- India’s difficulty: India depends heavily on imported crude oil, so high global oil prices directly affect inflation, fiscal pressure, current account deficit and fuel prices. Discounted Russian crude helped India manage energy security and refining costs.
- India’s position: India has maintained that its oil purchases are based on commercial viability and energy security, not merely on US waivers. However, waivers reduce transaction risks for Indian refiners by easing problems related to sanctions, shipping, insurance and payments.
- Current context: The extension has become important because tensions in West Asia and disruption risks near the Strait of Hormuz can reduce global oil supply. Allowing Russian crude to continue reaching markets may help stabilise international crude prices and reduce pressure on oil-importing countries like India.
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Russian Oil Sanctions Waiver and Energy Security