Trump administration officials said the temporary waiver on Russian oil is meant to ease global supply fears and prevent a surge in gasoline prices.
The US allowed India to continue purchasing Russian crude temporarily, as millions of barrels already in transit head to Indian refineries.
Crude prices surged to around $120 per barrel, with analysts warning supply disruptions in West Asia could keep prices elevated even if the conflict eases.
US Defends Russian Oil Waiver, Says Move Needed to Prevent Fuel Price Shock
US officials say the temporary waiver for Russian oil aims to ease supply fears and prevent a sharp spike in global fuel prices amid escalating West Asia tensions
Summary
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Trump administration officials on Sunday justified their decision to lift some sanctions on Russian oil, saying the current situation in West Asia warrants a likely surge in gasoline prices. The administration said that the lifting of sanctions is only temporary, as the price rise in crude from the geopolitical tensions would last only weeks. However, some reports citing analysts have cautioned that even if conflict resolution is reached as soon as possible, crude prices are expected to remain higher as traders are likely to continue facing disrupted logistics, shipping risks and the costs of damaged infrastructure in West Asia.
Moreover, multiple oil-producing countries have already slashed their oil production, including Iran, Iraq and Kuwait. Analysts predict that Saudi Arabia and the United Arab Emirates may also soon reduce their production, leading to further tightening of oil supply.
Last week, the US approved a 30-day waiver to India, allowing it to purchase Russian crude. However, owing to rising demand amid heightened geopolitical tensions, Russian crude is now being sold at a premium, instead of at a discount before the India-US interim trade agreement (ITA).
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US President Donald Trump announced the ITA in early February and claimed that India has agreed to stop buying Russian oil. New Delhi neither confirmed nor denied the claim. With tensions in West Asia escalating between Iran, Israel and the US, India has become particularly vulnerable as it was reducing its Russian import dependence and shifting back to West Asian crude suppliers.
On Sunday, US Energy Secretary Chris Wright and US Ambassador to the United Nations Mike Waltz said the waiver issued to India would alleviate pressure on the global market.
"It's a 30-day pause to allow, which is just kind of common sense, to allow the millions and millions of barrels of oil that are sitting out on ships to go to Indian refineries," Waltz said to NBC.
Meanwhile, Wright told CNN that the waiver can help "tamp this fear of shortage of oil, tamp the price spikes and the concerns we see in the marketplace."
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On Monday, both benchmarks, West Texas Intermediate and Brent, rose sharply, hitting multi-year highs amid rising worries over supply chain disruption. Crude oil prices rose as high as $120 per barrel.
"Short-term oil prices, which will drop rapidly when the destruction of the Iran nuclear threat is over, is a very small price to pay for U.S.A. and world safety and peace,” Trump wrote in a Truth Social post on Sunday night. "ONLY FOOLS WOULD THINK DIFFERENTLY!"