Reliance Pivots Back to Russian Oil as U.S. Waiver Exposes India’s Energy Bind
Washington granted India a 30-day window to unload Russian crude stranded at sea, reversing months of sanctions pressure and revealing the limits of coercive energy diplomacy.
The U.S. Treasury’s Office of Foreign Assets Control issued a general license on March 5 allowing Indian refiners to purchase Russian crude loaded on vessels through March 5, with deliveries permitted until April 4, according to OilPrice.com. Reliance Industries, India’s largest private refiner, immediately moved to purchase Russian oil under the temporary waiver, marking a sharp reversal after months of U.S. pressure that had driven India’s Russian crude imports to three-year lows.
U.S. Treasury Secretary Scott Bessent framed the waiver as necessary to “enable oil to keep flowing into the global market” amid disruptions caused by the effective closure of the Strait of Hormuz following joint U.S. and Israeli strikes on Iran on February 28, which killed Supreme Leader Ali Khamenei and triggered retaliatory Iranian attacks that halted shipping traffic through the vital waterway. The temporary authorization clears approximately 140 million barrels of Russian crude – roughly $3 billion worth – that accumulated offshore as U.S. Sanctions pressure cut India’s Russian imports by 36% in five months, according to data from Euromaidan Press.
The Strategic Volte-Face
The waiver represents a tactical retreat from Washington’s year-long campaign to sever India’s Russian Energy ties. President Trump singled out India for punishment over Russian oil purchases, doubling tariffs to 50% as of August 2025, according to OilPrice.com. Sanctions on Russian producers Rosneft and Lukoil, which took effect November 21, 2025, targeted entities accounting for 60% of India’s Russian oil imports, forcing a painful adjustment.
Reliance cut its Russian crude intake from over 550,000 barrels per day to about 150,000 bpd by February, per OilPrice.com. Despite the pressure, Russia remained India’s top crude supplier in February, accounting for 21% of total imports, with volumes holding steady at 1.1 million barrels per day through February 27, according to Business Standard.
The Hormuz crisis created an acute supply problem for India. India depends on Middle East supply for about 60% of its imports, and the halted tanker traffic through the Strait of Hormuz placed severe pressure on supplies, according to OilPrice.com. Brent crude pushed above $84 per barrel, with concerns about supply disruptions through the Strait of Hormuz, which handles nearly 20% of global oil shipments, Republic World reported.
The Price Calculus
The economics illuminate India’s resistance to U.S. pressure. The discount on Russian Urals crude from western ports widened to approximately $30.90 per barrel below Dated Brent on March 3 – the widest gap since April 2023 – even as oil prices rallied on the Middle East conflict, suggesting buyers still demand major incentives to take Russian barrels, Bloomberg reported.
However, following the waiver, Indian refineries reportedly contracted more than 10 million barrels of Russian oil and were paying $2-4 more per barrel for Urals than Brent, according to Izvestia, citing Bloomberg sources. The premium reversal reflects the supply desperation created by Hormuz’s closure.
| Period | Discount to Brent | Context |
|---|---|---|
| Pre-2022 | $1-3/bbl | Normal market conditions |
| Q2 2022 | $32/bbl | Initial EU/G7 sanctions |
| Nov 2025 | $28-30/bbl | India cutting volumes |
| March 4, 2026 | $30.90/bbl | Hormuz closure, widest since April 2023 |
| Post-waiver | Premium $2-4/bbl | Supply scarcity drives reversal |
Reliance’s gross refining margins fluctuate between $9 and $15 per barrel depending on crude sourcing; access to discounted feedstock could push margins toward the upper end, and even a $5 per barrel margin improvement could translate into millions of dollars in additional daily refining profits given the company’s 1.24 million bpd processing capacity, according to Republic World.
In mid-December 2024, Reliance signed a 10-year energy deal with Rosneft worth $13 billion annually, agreeing to purchase around 500,000 bpd of crude starting in 2025 – equivalent to 0.5% of global supply. The sanctions forced a suspension of this arrangement, creating contractual complexity beyond immediate supply concerns.
Split-Stream Strategy
Reliance plans to process Russian oil at its refinery unit producing fuels for the domestic Indian market, while a separate unit processing fuels for exports will continue using non-Russian crude, following the EU’s January 21 ban on imports of petroleum products derived from Russian-origin crude oil, according to OilPrice.com.
This bifurcation reflects India’s intricate compliance choreography. The EU measure prohibits petroleum products refined from Russian crude through non-EU states, directly impacting Indian refiners; in 2024-25, India exported petroleum products worth approximately $14.3 billion to the EU, most refined from discounted Russian crude, according to the Centre for Social and Economic Progress.
About 70% of Reliance’s oil imports in 2026 have come from the Middle East, according to Kpler data cited by UNN. Reliance operates the world’s largest refining complex at Jamnagar with combined capacity of 1.24 million barrels per day, providing flexibility to segregate feedstock by destination market.
The Geopolitical Triangle
The waiver exposes fundamental tensions in the U.S.-India-Russia triangle. President Trump on February 2 removed the 25% additional penalty on India, claiming India had committed to stop Russian oil purchases – a claim not confirmed by any Indian officials, CNBC reported.
India’s official position, stated by the Ministry of External Affairs spokesperson, emphasizes that ensuring energy security for 1.4 billion Indians is the supreme priority, with diversifying energy sourcing in keeping with objective market conditions at the core of India’s strategy, and that all decisions were taken and will be taken with this in mind, according to the Council on Foreign Relations.
“This deliberately short-term measure will not provide significant financial benefit to the Russian government as it only authorizes transactions involving oil already stranded at sea.”
– Scott Bessent, U.S. Treasury Secretary
The waiver’s narrow framing – clearing backlogged cargoes rather than authorizing new purchases – attempts to preserve Washington’s rhetorical position while addressing market realities. This is not a broad relaxation of secondary U.S. sanctions that India previously faced for buying discounted Russian oil, Euronews noted.
Kpler’s lead research analyst said he doesn’t see India stopping Russian oil purchases, with flows potentially declining from current levels around 20% to 15% but not lower, particularly as Nayara Energy – majority-owned by Russian entities including U.S.-sanctioned Rosneft – will continue buying Russian oil, according to CNBC.
OPEC+ Implications
The waiver arrives as Russia confronts weakening pricing power. Oil and gas revenues fell to roughly 23% of Russia’s federal budget in 2025 – still the single largest revenue source but down from nearly half a decade ago; Finance Minister Anton Siluanov predicted the share would fall to 22% in 2026 and warned it would decline further, according to Euromaidan Press.
Russia’s 2026 budget assumes Urals will trade at $59 per barrel, though Urals may trade 20-30% below Brent; if Brent settles around the median forecast of just under $60, Russia will with high probability face an actual oil price of about $40-45 per barrel, according to Re:Russia.
- U.S. granted 30-day waiver clearing $3 billion of stranded Russian crude as Hormuz closure disrupted Middle East supplies
- Reliance segregating Russian crude for domestic processing while using non-Russian feedstock for export-oriented refineries to comply with EU sanctions
- Russian Urals discount hit widest since April 2023 at $30.90/barrel, but desperate Indian demand briefly created premiums post-waiver
- India’s Russian crude imports fell 36% in five months under U.S. pressure but Russia retained top supplier status at 21% of February imports
- Waiver exposes limits of sanctions leverage when supply shocks override geopolitical preferences
What to Watch
The April 4 expiration date will test whether this represents tactical flexibility or strategic retreat. Whether this is a one-time clearance or the beginning of softer enforcement on Russian energy, the answer comes on April 4, Euromaidan Press observed.
Key variables include the Hormuz reopening timeline, Iraq’s production curtailments due to storage exhaustion, and whether Trump’s stated plans for U.S. Navy escorts materialize. Iraqi officials reported Iraq has already cut production by 1.5 million barrels per day as it runs out of storage due to the Hormuz closure, Reuters reported via CNBC.
Washington plans to press China to cut purchases of Russian and Iranian oil and shift toward buying American crude and LNG during President Trump’s March 31-April 2 visit to China, according to the Wall Street Journal via Euronews. The request’s reception will indicate whether energy realignment remains viable policy or rhetorical aspiration.
For India, the episode reinforces a core strategic assessment: only about 40% of India’s crude imports pass through the Strait of Hormuz, with the majority using other unaffected routes; India’s large and flexible refining infrastructure, which processes a wide variety of crude grades, bolsters energy security and allows it to be a net exporter of refined products, according to New Kerala. The Russian option, whatever Washington’s preferences, remains a buffer against Middle East volatility that no amount of tariff pressure can fully eliminate.