Treasury Reverses Course and Waives Sanctions on Russian Oil for Third Time
The U.S. Treasury has once again extended a sanctions waiver for the sale of Russian oil already on the water, despite past statements that there would be no further extensions. But there is a difference this time: the third 30-day waiver does not apply to any extra oil loadings, and therefore will not (on paper) introduce new supplies of Russian crude to the "compliant" market.
In a statement, the Treasury said that it was waiving sanctions temporarily in order to help the market weather the ongoing effects of the Iranian and American blockades at the Strait of Hormuz, which have resulted in the suspension of more than 10 million barrels per day of seaborne crude oil flows. Loosened restrictions on the sale of Russian cargoes - normally purchased by China - are a quick way to fill part of this gap, at the cost of strengthening the Russian state.
"This general license will help stabilize the physical crude market and ensure oil reaches the most energy-vulnerable countries," said Treasury Secretary Scott Bessent in a statement. "It will also help reroute existing supply to countries most in need by reducing China’s ability to stockpile discounted oil."
On April 15, Bessent said that the Treasury would not renew the sanctions waiver, and the agency renewed it three days later. On April 24, he again indicated that Treasury would not renew the waiver. On Monday, after oil prices rose in anticipation of renewed U.S. strikes on Iran, Treasury reversed course again and implemented another 30-day extension. On both occasions, Bessent cited urgent humanitarian needs in the developing world.
Both the second and third waivers apply to the same oil cargoes, and only cover Russian oil loaded on or before April 17. That means that the new waiver extension doesn't meaningfully change the availability of crude, said analyst June Goh of Sparta.
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"There is no incremental Russian barrels for this latest set of waiver [sic]," said Goh in an advisory notice. "Our bullish view on FOB crude diffs remains unchanged."
Top image: Boracay / P Fos (VesselFinder)