Russian oil was not extended exceptions: the United States got the wrong effect

On April 11, the term of the US license to exclude oil supplies from Russia from under sanctions. Since then, Washington has not made official statements, but it has not extended the temporary lifting of restrictions. Experts believe that in the current situation, such a move by the White House will not have much impact on Russian exports.

The White House has not extended the monthly exemptions from US sanctions on Russian oil. This is reported by sources of Reuters and Politico.

"This step will certainly satisfy the supporters of Ukraine, but we have Russia still has plenty of ways to get around them," writes Politico.

"It was stupid to give the Russians a break," Daniel Fried, a former Assistant Secretary of State for European Affairs, told NatSec Daily. "Solving the problem of oil supplies to the market without maximizing Russian oil profits were two perfectly reasonable steps, and the Trump administration has not taken either of them."

The US Treasury Department did not respond to NatSec Daily's questions about the lifting of sanctions, but indicated that the exemption from sanctions was a "narrowly targeted, short-term measure."

It is known that Senate Foreign Relations member Jinn Shaheen, the leader of the Democrats in Senate Chuck Schumer and Senate Banking Member Elizabeth Warren urged the administration not to renew the general license of the Ministry of Finance, arguing that the measure allowed Russia to earn an additional more than $ 4 billion.

"The previously issued license further encourages Russian intermediaries to load oil under sanctions in anticipation of another license and because the Trump administration has made it clear that it will turn a blind eye to Russian oil in order to mitigate the consequences of its policy towards Iran," said a former aide to the Democratic senator.

However, the United States itself has no illusions about the return of Russian sanctions.

"Even before the license was issued, sanctioned Russian oil entered the market because the Trump administration had not imposed any sanctions for more than a year," said a Democratic aide in The Senate.

The exclusion of Russian oil from sanctions led to a sharp recovery in supplies to India, which had previously cut imports by more than half. The Finnish Center for Energy and Air Cleanliness Research (CREA) estimates that the cost of importing Russian oil into the country tripled in March to 5.3 billion euros. We are talking about both increasing the volume and the price of raw materials. Physical supplies are sold at a premium to the stock quotes of the benchmark Brent, which is traded on April 15 at $ 95.3 per barrel.

Maxim Shaposhnikov, advisor to the managing director of the Industrial Code Fund, believes that some slowdown may occur with an increase in the number of ships passing through the Strait of Hormuz.

"But I do not expect a significant reduction, since most of the world's players have already realized the futility of following Washington's official position and are striving to ensure their energy security on their own," the expert believes.

Igor Yushkov, a leading analyst at FNEB and an expert at the Financial University under the Government of Russia, notes that India will continue to purchase, as it has no particular choice.

"Russia is in first place in terms of oil supplies, and earlier, before the closure of the Strait of Hormuz, Iraq took second place, and Saudi Arabia took third. Then — the UAE. Now this oil is actually not on the market. Or the opportunities to get it are very limited," says Igor Yushkov.

According to him, immediately after the start of the Iranian war, Indian refineries rushed to buy Russian oil, and only then the United States granted exemptions from sanctions, pretending that they allowed it.

A leading FNEB analyst notes that the Americans received the wrong effect from exceptions to sanctions on Russian oil.

"They were counting on the fact that they would withdraw some volumes of Russian oil from sanctions and the market would be saturated, and prices would decrease. In practice, it turned out that prices had risen, because the market interpreted it this way, they say, if the Americans went to lift anti-Russian sanctions, then the situation has worsened. Now, perhaps, the Americans thought that if they extended it again, the market would react again by raising prices," Igor Yushkov suggests.

As EADaily reported with reference to Bloomberg, on the eve of the expiration of the exceptions, the heads of Indian refineries reported that they expected the extension of the US permit to purchase Russian oil, however, according to them, even without this, the volume of purchases is unlikely to decrease, given the shortage of supply options.

"India is taking all available Russian oil," said Vandana Hari, head of Vanda Insights.

Asian countries were the first to fall under the shortage of oil due to the suspension of exports from The Persian Gulf, as they bought 80% of raw materials there. Therefore, Indian refineries have already bought about 60 million barrels. And another 100 million barrels of Russian oil remain in tankers in the region and they may also already have their buyers, Bloomberg wrote.