US Allows Purchase of Sanctioned Russian Oil Amid Conflict

Asia-Pacific markets fell on Friday as oil prices surged due to renewed fears of a prolonged conflict in the Middle East, potentially disrupting energy supplies and stoking fears of a global economic downturn. Iran's new Supreme Leader Mojtaba Khamenei threatened to keep the Strait of Hormuz shut, and oil prices jumped 9% to above $100 per barrel. Major indexes in Japan, South Korea, Hong Kong, and mainland China declined. Analysts expect oil prices to remain elevated in the near term but ease by the end of the year. The U.S. President Donald Trump downplayed the rise in oil prices, while Treasury Secretary Scott Bessent announced a temporary allowance for the purchase of sanctioned Russian crude to stabilize energy markets.

The US has temporarily lifted sanctions to allow the purchase of stranded Russian oil, drawing interest from countries like Thailand, Japan, and India. This move comes as Iran's new Supreme Leader, Mojtaba Khamenei, vowed to keep the Strait of Hormuz closed, causing oil prices to surge above $100 a barrel. The conflict in the Middle East is expected to continue disrupting commodity supplies and impacting markets. Meanwhile, a US military refueling plane crashed in Iraq, and rescue efforts are underway. The article also touches on the lack of movement in gold prices despite the escalating conflict.

The U.S. has temporarily allowed the purchase of Russian oil already at sea to stabilize energy markets amid rising crude prices. The measure, announced by U.S. Treasury Secretary Scott Bessent, is a 'narrowly tailored, short-term measure' that applies only to oil already in transit. There are approximately 124 million barrels of Russia-origin oil at sea across 30 locations globally. The exemption will cover Russian crude products loaded on ships on or before 12.01 a.m. Eastern time, and purchases are allowed till April 11, 12.01 a.m. The move comes after Washington granted a 30-day waiver to India to buy Russian crude. The G7 and the European Union have imposed sanctions on Russian oil for its invasion of Ukraine in 2022, imposing a price cap of $44.1 per barrel for Russian oil.

The Trump administration has temporarily lifted sanctions on Russian oil stranded at sea, allowing countries to purchase certain Russian oil products. This move is seen as a boost for the Kremlin amid the ongoing war in Ukraine. The decision comes as the US is trying to mitigate surging crude prices following the war it launched with Iran, which has led to the closure of the Strait of Hormuz and a global energy crisis. At least 16 oil tankers have been attacked in the region, and Iran has warned it will set the region's oil and gas infrastructure on fire. The US move has been criticized by Democratic Senator Jeanne Shaheen, who said it would fill the Kremlin's war coffers while American families face higher prices. The license issued by the US Treasury only applies to Russian crude or petroleum products loaded on vessels as of March 12 and authorizes those shipments through April 11.

The UK Defence Secretary, John Healey, has stated that Vladimir Putin's 'hidden hand' is likely helping Iran respond to Donald Trump's actions, as Iranian-linked drones have hit a base in Iraq where British troops are located. Healey suggested that Russia's experience in Ukraine has influenced Iran's tactics, including the use of drones. The UK and US have been involved in military operations in the region, with reports of US casualties, but no serious injuries. The Defence Secretary emphasized that Putin is likely benefiting from the high oil prices resulting from the conflict.

The article discusses how the US-Iran conflict is benefiting Russia's economy, particularly its oil revenues, despite sanctions imposed due to its invasion of Ukraine. As the US-Israeli strikes on Iran have sent oil prices soaring, Russia is cashing in on its plentiful crude oil supplies. The price of Urals crude has soared, and the discount Russia was forced to offer due to sanctions has been erased, delivering a windfall to the Kremlin. Russian oil revenues have increased by 17% in the last two weeks, and exports from northern Russian ports are up 24%. The US waiver allowing India to continue buying Russian oil from sanctioned companies has further alleviated pressure on Russia's economy. Experts warn that the longer the Iran conflict continues, the more Russia is likely to profit, boosting its war chest against Ukraine.