US Treasury Lets Russian Oil Sanctions Waiver Lapse, Impacting Prices and Imports
Sanctions Waiver Expiration and Its Effects on Global Oil Markets
Background on the Sanctions Waiver
May 16 (Reuters) - The Trump administration on Saturday allowed a sanctions waiver to lapse that had previously allowed countries including India to buy Russian seaborne oil after a month-long extension aimed at easing oil supply shortages and high prices due to Iran's closure of the Strait of Hormuz.
Official Statements and Political Reactions
US Treasury's Position
• U.S. Treasury Secretary Scott Bessent had previously said he would not renew the general license allowing the purchase of Russian oil stored on tankers.
• As of early afternoon Washington time on Saturday, no renewal notice had been posted on the Treasury website. A Treasury spokesperson declined further comment.
Senators' Concerns
• Two top Democratic U.S. senators, Jeanne Shaheen and Elizabeth Warren, on Friday urged the Trump administration against renewing the waiver, arguing that it was providing revenue to Russia to aid its war in Ukraine, but there was no evidence it was bringing down fuel costs for American consumers.
Impact on Oil Prices and Policy Measures
Efforts to Control Energy Prices
• The prior extension was part of the Trump administration's effort to control global energy prices that have shot higher during the Iran war, including loans from the Strategic Petroleum Reserve and a temporary waiver of a shipping rule known as the Jones Act. In addition, President Donald Trump has said he supported pausing the 18.4-cent-a-gallon federal tax on gasoline.
Current Market Situation
• The moves have done little to calm U.S. gasoline prices, which are currently at about $4.50 a gallon, the highest since 2022. Both domestic and international oil prices have hovered around or above $100 per barrel since the war began on February 28.
International Implications
China's Potential Role
• Trump told reporters on Friday returning from Beijing that he had discussed with Chinese President Xi Jinping possibly lifting sanctions on Chinese companies that buy Iranian oil and will make a decision soon.
India's Continued Purchases
• India is the top consumer of Russian seaborne crude, and its purchases have been near record highs in April and May following previous sanctions waivers.
Reporting Credits
(Reporting by David Lawder in Paris and Timothy Gardner in Washington; Editing by Matthew Lewis)
