Russian supertanker Astro Lupus waits to unload its cargo of the first direct shipment of Russian crude oil on July 3, 2002 in the Gulf of Mexico.
Pool | Afp | Getty Images
The U.S. on Thursday temporarily authorized the purchase of Russian oil stranded at sea to stabilize energy markets.
U.S. Treasury Secretary Scott Bessent said in a post on X that this was a “narrowly tailored, short-term measure” that applies only to oil already in transit.
CNBC understands that there are roughly 124 million barrels of Russia-origin oil at sea across 30 locations globally as of March 12, enough for about five to six days of supply.
“The temporary increase in oil prices is a short-term and temporary disruption that will result in a massive benefit to our nation and economy in the long-term,” Bessent said.
Oil prices have swung sharply since the start of the Iran war, with oil nearing hitting nearly $120 per barrel on Monday.
Global benchmark Brent closed just above $100 per barrel Thursday after Iran’s new supreme leader Mojtaba Khamenei vowed to keep the Strait of Hormuz closed.
Bessent noted the temporary measure will not provide “significant financial benefit to the Russian government.”
The treasury secretary said this is because Moscow gets the majority of its energy revenue from taxes assessed at the point of extraction.
A notice on the Treasury’s website said the exemption would 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 last Thursday granted a 30-day waiver to India to buy Russian crude, with Bessent also saying that it will not provide significant financial benefit to the Russian government “as it only authorizes transactions involving oil already stranded at sea.”
Speaking in a podcast interview released on Friday, Bessent said that it was “unfortunate” that Russia will benefit financially from this move, “but we hope that it will be [for] a micro period.”
He explained that the waiver was given as “the Russian barrels are on the water, and it is a quick source for the Indian refineries.”
The G7 and the European Union have currently 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 EU has also committed to phasing out all remaining oil imports from Russia by the end of 2027.
Back in 2022, then-U.S. President Joe Biden had banned the import of Russian oil, liquefied natural gas, and coal into the U.S.