US waiver on Russian oil ends: Will petrol and diesel prices rise again?

The Donald Trump administration has allowed a sanctions waiver on Russian seaborne crude to expire. The waiver had 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.

This comes at a time when global crude oil prices are already rising sharply because of the ongoing West Asia conflict and supply disruptions around the Strait of Hormuz, one of the world’s most important oil shipping routes.

The development comes days after petrol and diesel prices in India were increased for the first time in nearly four years by around Rs 3 a litre on May 15.

Now, with the US allowing the sanctions waiver on Russian oil purchases to expire, there are concerns that fuel prices may come under even more pressure and there will be another round of hike.

The Strait of Hormuz, the world's most critical oil chokepoint, remains under disruption due to the Iran war. This has led to tanker movements slowing down and resulted in insurance costs increasing.

Global crude prices surged above $111 a barrel on Monday, from around $72 before the conflict began.

Top consumer

India is the top consumer of ​Russian seaborne crude, and its ​purchases have been near record highs in April and May after the previous sanctions ​waivers.

According to reports, since the war began, India has been sourcing oil from Russia (about 45%), Saudi Arabia, Iran, Venezuela, Brazil, Angola, the US, Canada, and other countries.

In view of higher prices, reduced production, and increased transportation costs, oil companies in India are incurring losses of Rs 1,000 crore per day, according to the Minister for Petroleum and Natural Gas. In the past few months alone, losses have reached up to Rs 2 lakh crore.

With the renewed restrictions on Russian oil looming and oil supply from West Asia unstable, India is now in the middle of a double crisis.