India has formally asked the United States to extend a crucial waiver that permits the import of Russian oil. This plea arrives amidst the persistent conflict in the Persian Gulf region, which continues to destabilize global energy markets and disrupt supply chains.
US authorities initially granted India a waiver in March, later expanding its authorization until May 16. This measure was intended to help stabilize rising oil prices by ensuring additional crude supplies could reach the market. However, Indian officials have now communicated to the US that maintaining stable energy supplies is a paramount national priority.
Economic Consequences of Volatility
Officials warned that the current volatility in global oil markets could have severe economic consequences, impacting 1.4 billion people in India. They highlighted existing pressures, including shortages of cooking gas, as evidence of the escalating energy crisis.
While Russian crude is not under blanket US sanctions, Washington had previously urged New Delhi to reduce its purchases of discounted Russian oil as a means to intensify pressure on Moscow over the Ukraine conflict. India, however, is now prioritizing its domestic energy security.
Global Oil Market Impact
The global benchmark, Brent crude oil, has seen a significant surge, trading above $105 per barrel. Before the Iran conflict erupted on February 27, Brent crude was priced around $72–$73 per barrel. This represents an increase of approximately $32–$34 per barrel, or about 44–47% higher than pre-war levels, highlighting the severe impact of the ongoing geopolitical tensions on oil prices.
India's Response and Reserves
In anticipation of the current waiver deadline, Indian refiners have substantially increased their imports of Russian oil. Data from Kpler indicates that India's daily Russian crude inflows reached a record 2.3 million barrels per day in May as refiners accelerated purchases under the waiver window, which allowed for the import of already loaded cargoes.
India maintains strategic energy reserves, including 60 days of crude oil, 60 days of Natural Gas, and 45 days of LPG rolling stock. The nation's foreign exchange reserves stand at a robust $703 billion.
As the world's third-largest oil refiner and fourth-largest exporter of petroleum products, supplying over 150 countries, India is currently meeting its domestic demand in full. However, the Defence Ministry noted that the nation is bearing a substantial cost due to sustained high international crude prices, emphasizing that fuel conservation could help alleviate this burden.