The US on Thursday temporarily lifted sanctions on Russian oil that is currently at sea, allowing it to be shipped to buyers around the world as the Donald Trump administration scrambles to contain energy prices that have been soaring because of the war in Iran.
The exemptions, which were issued by the treasury department, will be in place until April 11. Treasury secretary Scott Bessent estimated that freeing Russian oil could add hundreds of millions of barrels of crude to global markets, curbing prices that have been hovering near $100 per barrel as a result of the Iran conflict.
The latest move by President Trump to signal relief to markets slowed but did not reverse the increase in prices. The worldwide price of oil rose slightly on Friday, continuing to trade around $100 a barrel on heightened fears about the economic impact of a sustained blockage of West Asia energy.
According to data analytics firm Vortexa, around 7.3 million barrels of Russia-originated oil have been in floating storage, while 148.6 million barrels have been in vessels in transit.
Trump’s decision was a significant turning point in America’s effort to punish Russia for its war in Ukraine.
Russia has faced punishing sanctions from the US and the rest of the Group of 7 advanced economies since Moscow’s invasion of Ukraine in 2022. Those sanctions have included a price cap on Russian oil and a crackdown on Russia’s “shadow fleet” of unmarked vessels that oil exporters have used to evade sanctions.
As Trump’s war with Iran has unfolded, his administration has looked for ways to mitigate the economic pain. His administration temporarily freed Russian oil last week that was sitting at sea and was set to be delivered to India. It is also in the process of offering a $20-billion maritime insurance backstop through the US International Development Finance Corporation, an agency that generally lends to and invests in overseas companies and projects.
Bessent asserted on Thursday that Russia would not benefit significantly from the sanctions relief but acknowledged that Moscow would see some financial benefit.
“To increase the global reach of existing supply, Treasury is providing a temporary authorisation to permit countries to purchase Russian oil currently stranded at sea,” he wrote in a social media post. “This narrowly tailored, short-term measure applies only to oil already in transit and will not provide significant financial benefit to the Russian government, which derives the majority of its energy revenue from taxes assessed at the point of extraction.”
In a podcast interview on Thursday, Bessent said it was “unfortunate” that Russia stood to gain financially from the conflict in Iran but that he hoped it would benefit for only a “micro period”.
Europe unhappy
The move by the Trump administration could further divide the US and Europe, which has been sceptical of Trump’s attack on Iran and has expressed a desire to continue to exert economic pressure on Russia.
German Chancellor Friedrich Merz said any move to ease Russia sanctions was wrong, while his economy minister Katherina Reiche said the decision was probably driven by US domestic pressure.
“Six members of the G7 expressed a very clear opinion that this was not the right signal. We then learned this morning that the American government has apparently decided otherwise,” Merz told a media conference in Norway.
“Again, we believe this is wrong. There is currently a price problem but not a quantity problem. And therefore, I would like to know what other motives led the American government to make this decision,” he said.
Norway’s Prime Minister Jonas Gahr Stoere also said that energy sanctions on Russia should not be eased.
British energy department minister Michael Shanks told BBC radio on Friday that the UK government would not be loosening its sanctions on Russia at all, describing the timing as a “critical moment in the Russian aggression against Ukraine”.
Russia pat
Kremlin spokesman Dmitry Peskov told reporters on Friday the US move was aimed at stabilising world energy markets.
“In this respect, our interests coincide,” Peskov said.
“The situation is fraught with the risk of a growing crisis in the global energy sector... without significant volumes of Russian oil, market stabilisation is impossible,” he added.
Zelensky: Not right
Ukrainian President Volodymyr Zelensky said the US waiver on Russian oil sanctions was “not the right decision” and won’t help bring a stop to Russia’s more than 4-year-old invasion of Ukraine.
“This easing alone by the United States could provide Russia with about $10 billion for the war,” Zelensky said. “This certainly does not help peace.”
New York Times News Service and Reuters