India Sees Drop in Crude Oil Prices After U.S. Grants 30-Day Exemption for Russian Oil Purchases

New Delhi, March 6: Last week, crude oil prices surged by over 15% following the outbreak of war between Israel and Iran. However, on Friday morning, a decline in oil prices was observed. The primary reason for this drop is the U.S. decision to grant Indian refiners a 30-day temporary exemption to purchase stranded Russian crude oil.

On the Intercontinental Exchange, the benchmark Brent crude for April delivery fell by 1.52% to trade at $84.21 per barrel. Meanwhile, West Texas Intermediate (WTI) saw a decrease of 2.10%, reaching $79.31 per barrel in early trading.

The 30-day exemption from the U.S. has somewhat alleviated concerns regarding the global oil supply chain. This is particularly significant given the heightened tensions around the Strait of Hormuz, which raised fears of supply disruptions. Indian refiners may find some additional relief in purchasing Russian crude oil due to this decision.

U.S. Treasury Secretary Scott Basent stated that the Treasury Department is providing Indian refiners with a temporary 30-day allowance to purchase Russian oil to maintain oil supply in the global market. He clarified that this exemption is limited to transactions involving oil already stranded at sea, ensuring that the Russian government does not gain significant financial benefits.

Previously, the U.S. indicated that it could deploy naval escorts to ensure the safety of oil tankers passing through the Strait of Hormuz if necessary. Growing tensions with Iran have raised concerns about energy supply and shipping security in one of the world’s most crucial maritime trade routes. The White House also mentioned that recent actions against Iran could enhance the long-term stability of the global energy market.

India imports approximately 90% of its total oil needs. According to data from global ship tracking company Kepler, Russia was the largest supplier to India in February, averaging 1.04 million barrels per day. This was followed by Saudi Arabia, supplying about 1 million barrels per day, and Iraq, providing around 980,000 barrels per day.

India consumes about 5.5 million barrels of crude oil daily, with approximately 1.5 to 2 million barrels passing through the Strait of Hormuz. Therefore, the status of this maritime route is considered crucial for India’s energy security.

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