The US administration's decision to carve out an exemption for India to import Russian crude is temporary and will not lead to broader policy change toward Moscow, US energy secretary Chris Wright said.
US Treasury Department's sanctions enforcement arm Office of Foreign Assets Control on Thursday said it will allow importers in India to buy Russian crude loaded on or before 5 March and delivered to a port in India on or before 4 April.
"There's a bunch of floating barrels just sitting there, so we've reached out to our friends in India and said, 'Buy that oil'", Wright told ABC News late on Thursday. "This is no change in policy towards Russia. This is a very brief change in policy just to keep oil prices down a little bit better than we could otherwise."
President Donald Trump's administration has been pressuring India since last summer to cut back on Russian crude purchases. Over 15m bls of Russian oil are floating off the Indian coast and could potentially reach a terminal within days, data from market intelligence firm Kpler show.
The US sanctions waiver would allow "pulling stored oil immediately into Indian refineries and releases the pressure on other refineries around the world to buy oil that they're no longer competing with the Indians for in that marketplace", Wright said.
Indian refiners could be paying more to buy Russian oil stranded around the Arabian Sea given the de facto closure of the strait of Hormuz.
Refiners were offered Russian medium sour Urals at a premium of $1-5/bl to Ice Brent or Dubai contract prices, market sources said. This compares to a discount of $12.35/bl against Dated assessed by Argus on 27 February, the day before the war started. The exact details and level of the offers could not be confirmed immediately with market participants.
Russian suppliers have mostly paused offers of Urals crude to China this week, refinery officials in Shandong said, given that Indian refiners stepped up purchases of Urals under a waiver granted by the US.
