US grants India 30-day Russian oil waiver as Iran war squeezes global supply

The waiver highlights how the conflict that began with U.S. and Israeli strikes on Iran on Feb. 28 has tightened global energy markets in ways that deliver an unintended revenue lift to Russia, whose oil and gas receipts had fallen to a four-year low before the war began.

The U.S. Treasury Department granted India a 30-day exemption to continue buying Russian crude oil and petroleum products, Treasury Secretary Scott Bessent announced Friday, as the Iran war’s effective closure of the Strait of Hormuz drove oil prices sharply higher and raised concern about costs for American consumers. The waiver runs through April 4.

The measure covers Russian oil stranded on tankers without buyers. Analysts estimated the affected supply at roughly 125 million barrels, according to the Associated Press.

The move underscores how the conflict that began with U.S. and Israeli strikes on Iran on Feb. 28 has tightened global energy markets in ways that deliver an unintended revenue lift to Russia, whose oil and gas receipts had fallen to a four-year low before the war began.

Hormuz closure drives price spike

The Strait of Hormuz, the only sea passage out of the Persian Gulf, has seen almost all tanker traffic halted since the war widened, the AP reported. The strait carries oil and gas from Saudi Arabia, Kuwait, Iraq, Qatar, Bahrain, the United Arab Emirates and Iran — a conduit for roughly 20% of the world’s oil needs, according to the AP.

International benchmark Brent crude rose to $89 per barrel on Friday, up from just under $73 a week earlier on the eve of the Iran war. Russia’s Urals blend hit $70 per barrel, up from below $40 as recently as December, according to the AP.

“This stop-gap measure will alleviate pressure caused by Iran’s attempt to take global energy hostage,” Bessent said on X.

Russia’s revenue reversal

The price spike reversed what had been a deepening fiscal squeeze on Moscow. Russia’s state oil and gas revenue fell to a four-year low of 393 billion rubles ($5 billion) in January, according to Finance Ministry figures cited by the AP. The budget shortfall for that month reached a record 1.7 trillion rubles ($21.8 billion).

Russia’s 2026 federal budget was built on an assumed Urals crude price of $59 per barrel. Russian crude now trades well above that level. Oil and gas taxes account for 20% to 30% of the Russian federal budget, the AP reported, and are assessed once producers cover production costs of roughly $15 per barrel.

Russian oil still trades at a significant discount to the Brent benchmark. But the gap has narrowed sharply since the conflict began.

Kremlin spokesman Dmitry Peskov said Russia welcomed the renewed demand.

“We note a significant increase in demand for Russian energy resources in connection with the Iran war,” Peskov said. “Russia has been a reliable supplier of oil and gas. It can guarantee all contracted supplies.”

LNG markets also affected

An Iranian drone strike hit Qatar’s largest liquefied natural gas plant early in the conflict, halting ship-borne LNG production from a major global supplier, according to the AP. The disruption has sent European natural gas futures sharply higher, raising questions about EU plans to phase out remaining Russian gas imports by 2027.

Background: India’s tariff reprieve

Trump had imposed 25% tariffs on India for continuing to purchase Russian oil after Moscow’s full-scale invasion of Ukraine in February 2022. He dropped those tariffs on Feb. 6 in return for what he said was India’s commitment to stop such purchases. Indian oil imports from Russia had diminished following the tariff pressure, the AP reported.

The new waiver creates a 30-day window that effectively reverses that arrangement for existing stranded cargoes.

Uncertain duration

Oil market analysts said the war’s financial impact on Russia would depend heavily on the conflict’s length. A brief war ending within weeks could see prices fall back toward pre-war levels around $65 per barrel, leaving Russia with little lasting benefit, according to analysts cited by the AP. A prolonged conflict that inflicts long-term damage on oil fields, pipelines and terminals across the Gulf region could push prices above $100 per barrel and deliver a sustained windfall to Moscow.

In its first week, the war has expanded to draw in more than a dozen countries, the AP reported.