US eases sanctions on Russian oil to keep markets supplied

The US could remove sanctions on additional Russian oil supplies as Washington reassesses energy flows as Operation Epic Fury triggers the start of a global energy crisis.

As bne IntelliNews reported, the impact on energy markets has rapidly gone from a mere disruption to a full-blown crisis in under a week. Gas prices immediately spiked after Qatar cut off deliveries last week following the closure of the Straits of Hormuz on March 2.

Oil prices have been slower to catch up, but the price of Brent jumped from $65 per barrel pre-war to $90 as of March 7. However, as the first Gulf producers run out of storage space, they are starting to shut down production, which portends to supply shortages that are driving up prices.

In an effort to mute the impact on energy markets that are starting to panic, US Treasury Secretary Scott Bessent announced the softening of oil sanctions on Russia to boost supplies. Russia is the biggest supplier of oil that is entirely produced and transported outside of the conflict zone. Trump imposed oil sanctions on Russia last year and together with EU partners has been tightening the noose on Russia’s shadow fleet in recent months.

Bessent’s remarks came a day after the US issued a 30-day waiver allowing the sale of Russian crude currently stranded at sea to continue to India. The waiver temporarily allows shipments already loaded onto tankers to reach Indian buyers despite sanctions that have complicated the trade of Russian crude since the invasion of Ukraine in 2022.

India has emerged as one of the largest buyers of discounted Russian crude since western sanctions were imposed, helping Moscow maintain export volumes while reshaping global oil flows. Russian oil that once moved primarily to Europe has instead been redirected to Asian markets, particularly India and China.

Heavily dependent on energy imports, India has been bracing for an oil shock since the war began. Both India and China have already restricted oil and gas exports to preserve their own supplies for the domestic market.

The US decision to allow stranded cargoes to be delivered underscores a delicate balance policymakers face between maintaining pressure on Russia and an expanding energy crisis that threatens to spin out of control in a repeat of the 2022 energy crisis at the start of the Ukraine war.