Oil Prices Remain High Despite U.S. Shift on Russian Sanctions

US Temporarily Eases Sanctions on Russian Oil Shipments Amid Global Supply Concerns​

Move Aims to Stabilize Energy Markets During Iran War Disruptions​

The United States is temporarily easing certain sanctions on Russian oil shipments as global energy markets face supply pressures linked to the ongoing Iran war and disruptions in the Middle East.

The decision allows the sale of Russian crude that has already been loaded onto tankers, a move aimed at calming oil markets and preventing further price spikes driven by supply shortages.

30-Day Sanctions Relief for Oil Already at Sea​

According to U.S. Treasury Secretary Scott Bewley, sanctions will be lifted for 30 days on shipments of Russian oil that were loaded onto vessels starting Thursday. The temporary measure allows buyers to purchase the oil without fear of violating U.S. sanctions.

The Trump administration had earlier provided a similar 30-day reprieve to Indian refineries.

Bewley described the move as a targeted and short-term measure designed to stabilize global energy markets and keep oil prices under control. He added that permitting the sale of already loaded cargo would not provide additional financial benefit to Russia, since the Kremlin collects taxes on oil production at the point of extraction.

Ukraine Criticizes Decision as Support for Russia’s War Effort​

The decision has drawn criticism from Ukraine. President Volodymyr Zelenskyy said the temporary sanctions relief could indirectly finance Russia’s military campaign.

According to Zelenskyy, the measure could allow Russia to generate around $10 billion that may be used to purchase weapons for the war.

Meanwhile, Kremlin spokesperson Dmitry Peskov said the move could help stabilize global energy markets, stating that such stability would be difficult to achieve without significant volumes of Russian oil.

Oil Prices Remain Elevated Despite Announcement​

Following the announcement, the price of international benchmark Brent crude briefly declined before rebounding. As of 1800 GMT on Friday, Brent crude traded at $103.24 per barrel.

Despite the brief dip, prices remain significantly higher than the $72.87 per barrel recorded on February 27, the day before the Iran war began.

Strait of Hormuz Disruptions Intensify Energy Shock​

The conflict has disrupted tanker traffic through the Strait of Hormuz, a critical shipping route that normally carries about 20% of the world’s oil supply.

The disruption has triggered a major energy shock for the global economy and increased inflation risks worldwide.

Analysts estimate that approximately 125 million barrels of Russian oil are currently being transported by sea. This volume is equivalent to about five to six days of typical shipments through the Strait of Hormuz or slightly more than one day of global oil consumption, which stands at roughly 101 million barrels per day.

Russia Redirected Oil Exports After Western Sanctions​

After Russia launched its full-scale invasion of Ukraine in 2022, the European Union and many Western buyers stopped importing Russian oil.

Russia subsequently redirected exports to China and India, often selling crude at discounted prices due to price caps imposed by the United States, the European Union, and allied countries.

Over time, Russia built a fleet of aging tankers with complex ownership structures and insurance arrangements from countries not enforcing the price cap. This so-called shadow fleet allowed Moscow to bypass restrictions and maintain export volumes.

Discounts Narrow as Global Oil Prices Rise​

Western allies have also targeted individual vessels associated with the shadow fleet, which increased the compliance risks for buyers. As a result, customers in China and India demanded deeper discounts to compensate for the legal and logistical risks of purchasing Russian oil.

In December, Russia’s Urals crude traded for under $40 per barrel, around $25 below Brent crude. The discount significantly reduced Moscow’s oil revenues.

However, as global oil prices climbed due to Middle East tensions, Russian crude has also risen in price and now trades above $80 per barrel.

Oil and gas exports typically contribute between 20% and 30% of Russia’s federal budget, making energy sales a critical source of government revenue.

Russia’s Energy Revenues Rise During Iran Conflict​

During the Iran war, Russia’s daily income from oil sales has increased by about 14% compared with February levels.

Data from the Centre for Research on Energy and Clean Air shows that Russia has been earning around 510 million euros per day this month from oil and liquefied natural gas exports.

Despite the temporary easing of sanctions, Russian crude still trades at a significant discount to Brent due to ongoing restrictions and compliance risks in global markets.

G7 Divisions Emerge Over US Decision​

The move has also exposed divisions among Western allies. German Chancellor Friedrich Merz said leaders of the Group of Seven democracies discussed Russian oil during a recent meeting with President Donald Trump.

According to Merz, six members of the group expressed the view that easing sanctions sends the wrong signal at a time when pressure on Russia remains a key part of the strategy related to the Ukraine conflict.