The Trump administration has extended a license that allows countries to purchase Russian oil already loaded onto tankers. The new permit is valid until May 16. This is a forced step: US allies, especially in Asia, faced a collapse in supplies due to the conflict in the Middle East and asked Washington to give them access to alternative raw materials.
The previous 30-day easing expired on April 11. Two days earlier, US Treasury Secretary Scott Bessent announced that the authorization would not be renewed. However, under pressure from countries that participated in the spring meetings of the G20, the World Bank and the IMF in Washington, the decision was revised. Now the new deadline is a little more than a month.
It’s only about about that oil, which was loaded onto tankers until April 18. Transactions involving Iran, Cuba and North Korea are still prohibited. According to Kremlin special representative Kirill Dmitriev, this permit will affect about 100 million more barrels of Russian oil. In total with the previous one, it will cover 200 million barrels.
Two weeks earlier, the United States issued a similar license for Iranian oil, allowing approximately 140 million barrels to enter the market. Then this helped relieve tension with supplies. Now it’s Russia’s turn.
The paradox is that high oil prices threaten Republicans ahead of the November midterm elections. In addition, Donald Trump personally discussed this issue in a conversation with Indian Prime Minister Narendra Modi, one of the countries that actively purchases Russian raw materials.
The US Congress criticized the administration for the relaxation. They believe that this helps the economies of Iran and Russia while they are fighting wars against the United States and Ukraine. The head of the European Commission, Ursula von der Leyen, said that now is not the time to ease sanctions.
However, the conflict in the Middle East has already caused serious damage to the global energy market. According to the International Energy Agency, this is the largest outage in history. More than 80 oil and gas facilities have been damaged, and Iran is threatening to close the Strait of Hormuz again if the US Navy continues its blockade of Iranian ports.
On Friday, after the temporary opening of the strait, world oil prices fell by 9% to $90 per barrel. But experts warn: the tools to stabilize the market are almost exhausted. The damage from war is long-term, and this permit for Russian oil is likely not the last.
Source: Reuters
Image: Alexander Manzyuk
