US extends sanctions waiver for Russian energy

The US administration will extend a sanctions waiver exempting third-party purchases of Russian oil, natural gas and other energy commodities until 5 December.

The White House has already banned imports of Russian oil and other energy commodities into the US but has exempted trade transactions involving foreign buyers of Russian energy products from US sanctions targeting the Russian banks. The current waiver was due to expire on 24 June. The new deadline of 5 December matches the planned date of the EU phase-out of Russian crude purchases.

The terms of the sanctions waiver have not changed. The US requires that US dollar payments for Russian energy exports be routed and processed through third-country banks. The Treasury Department's sanctions enforcement arm in additional guidance said it would allow a wind-down of energy transactions if the waiver is not renewed after 5 December.

The US issued the original waiver in February to ensure a coordinated approach on Russia sanctions with the EU, which continues to import oil, products and natural gas from Russia. The US and its allies are discussing ways to reduce Russia's energy exports revenue without imposing curbs on volumes it exports. Price caps are among the options that US president Joe Biden and other leaders of the G7 summit of major economies will discuss at a summit later this month.

The US, EU and all G7 members have implemented a full or partial ban on Russian oil sales into their countries. But US efforts to lean on other major importers to cut back Russian oil purchases have not been successful.

India's crude imports from Russia topped 1mn b/d earlier this month, as the country's refiners took advantage of cut-price cargoes being shunned by Moscow's traditional customers in the west. Chinese imports of Russian crude surged to record highs in May — with imports of ESPO Blend alone hitting 1.4mn b/d.

US diplomacy with India on Russian oil imports is "a very difficult conversation because the Indian economy is so dependent on these imports and their inflation is worse than ours," State Department energy security envoy Amos Hochstein told a Senate panel last week. The US has urged Delhi not to scale up Russian oil imports too much to avoid appearing "like you're taking advantage of the pain that is being felt in European households and in the US" and to negotiate hefty discounts for Russian oil "because if you don't buy it, nobody else will," Hochstein said.

By Haik Gugarats