The United States has eased some restrictions on Russian oil sales as it tries to stabilize global energy markets, hit by Iran’s blockade of the Strait of Hormuz amid the war in the Middle East.
Will the US sanctions waiver be a big windfall for Moscow?
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‘A gift to Russia’
The US waiver allows countries to buy Russian oil currently sitting in the sea until April 11.
Given the short-term nature and technical limitations, it will not provide a large immediate windfall to Russia, although it still benefits Moscow, said Muyu Xu, an analyst at Kpler.
“The move primarily allows Russian barrels already in transit to complete their journeys and be unloaded,” he said in a note, calling it a “liquidation, not a reopening.”
In announcing the sanctions relief, US Treasury Secretary Scott Bessent said the move would not provide “significant financial benefits to the Russian government, which derives most of its energy revenue from taxes levied at the point of extraction.”
Kpler suggests that around 120 million barrels of Russian crude oil could be at sea right now.
That represents about two weeks of Russia’s total oil production.
But Kpler’s Muyu Xu said most of it had already been booked by Chinese or Indian customers, limiting the immediate increase in orders.
Washington had last week granted a similar waiver to New Delhi, which “gave Indian refiners a big advantage in getting hold of cargo,” he said.
The exemption may have more symbolic than financial weight for Moscow.
“It’s a gift to Russia in terms of sanctions,” said Richard Meade, editor-in-chief of Lloyd’s List Intelligence, a maritime data company.
Media reports suggested that Japan, Thailand and the Philippines were considering buying Russian crude oil following the US decision.
But Kpler’s Muyu Xu said some countries could still have concerns as EU and UK sanctions remain in place.
“It’s not very clear that everyone is free to buy… It’s not as easy as if Trump just turned on the tap and then the oil would naturally flow to the rest of the world.”
The Kremlin welcomed the decision by urging the United States to go further, with economic envoy Kirill Dmitriev saying the lifting of further sanctions seemed “inevitable” given the volatility of the global energy market.
Russian President Vladimir Putin offered earlier this week to supply oil to Europe if it reversed sanctions, but only on a “long-term” basis and “free from political pressure.”
Tens of billions
Beyond the American exemption, the general rise in oil prices since the start of the war in the Middle East has helped replenish Russia’s coffers, depleted by more than four years of war against Ukraine and international sanctions.
Russia’s ESPO blend, normally bought by China and India, is trading $30 to $40 per barrel higher than before the conflict.
Every additional $10 per barrel brings an additional $1.6 billion a month in tax revenue to the Russian government, estimated Sergey Vakulenko of the Carnegie Endowment.
If it “increased by $40 and maintained that level for six months, this would mean an additional $38 billion,” he said in a post on Telegram.
That would be enough to cover most of Russia’s deficit in 2025, which amounted to around $50 billion.
Russia has posted a budget deficit every year since it ordered troops into Ukraine and expects to do so again in 2026.
Oil and gas revenues – about a fifth of Russia’s state revenue – were at their lowest level in five years at the beginning of the year, hit by sanctions, production problems and Ukrainian attacks on energy facilities.
The measures, aimed at expanding supply to drive down prices, are a “godsend for Russia’s shadow fleet,” said Lloyd’s analyst Bridget Diakun, referring to the opaque tankers used by Russia to break sanctions.
“Russia can make a lot of money because it has a pass,” he added during a webinar.
Clamor from Ukraine and Europe
Ukrainian President Volodymyr Zelensky said US sanctions relief “certainly does not help peace.”
Europe, which has not eased its sanctions on Russian oil, also responded.
French President Emmanuel Macron said the closure of the Strait of Hormuz “in no way” justified lifting sanctions on Russia.
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Britain said “all partners should keep up pressure on Russia and its war fund”, while German Chancellor Friedrich Merz said “easing sanctions now, for any reason, is wrong”.
(FRANCE 24 with AFP)
