US’s U-turn amid Hormuz crisis: Trump administration extends exemption on Russian oil purchase till May 16

US Russian Oil Waiver Extension: Amidst the Iran war, oil prices are skyrocketing across the world and under this immense pressure, America has taken a big decision. US President Donald Trump’s administration has once again given temporary exemption to everyone on buying Russian oil. Under the extension of the US-Russia oil waiver, earlier there was a complete refusal to extend this waiver beyond April 11. But now after a new notification, this special discount has been extended till May 16.

Why did America take a U-turn?

The ongoing war with Iran and tension in the Strait of Hormuz have had a huge impact on global oil supply. About 20% of the world’s oil and gas is supplied through this route and the danger looming here had increased significantly. Due to rapidly rising oil prices, America had to give this temporary relief to maintain supply in the market.

Impact on oil prices

With this big announcement, there has been some relief in the oil market and the price of Brent crude has fallen drastically. The price of Brent crude fell nearly 9% to around $90 per barrel, which is the lowest level in the last one month. One reason for this decline is also believed to be Iran’s opening of the Strait of Hormuz for commercial ships during the ceasefire.

global market of Russian oil

According to Russian Presidential Envoy Kirill Dmitriev, the first exemption could have easily brought about 100 million barrels of Russian crude oil into the market. This huge quantity is almost equal to the entire global oil consumption in one day, which provides a huge support to the market. In such a situation, there is a lot of hope that the new exemption will support the oil supply at the global level.

Displeasure of allied countries

This big decision of the US may increase a lot of resentment among its allied countries and especially the European Union. Europe has long talked about maintaining tough sanctions on Russia and is against any relaxation. European Union’s Ursula von der Leyen has clearly said that now is not the right time to relax on Russia.

New order of treasury department

The US Treasury Department has given a big permission to the countries by issuing a new notification for exemption from April 17. Under this, countries have now been given permission to buy Russian oil and petroleum products directly till May 16. This means that no US sanctions will be applicable on the purchase of Russian oil loaded at sea for about a month.

Impact on the strategy of western countries

This new step of the US can weaken the united strategy of the Western countries and raise many serious questions. Mutual differences among the allied countries can now come out openly even on the strict policy made regarding the Ukraine war. The main challenge before the US was that if the oil supply decreases further, inflation will have a huge impact on the common people.

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30 days old discount

Earlier, the special relaxation of 30 days given had ended completely on April 11. Then there were clear indications that now the US is going to show more strictness on the issue of Russia and Iran. But as the situation of Hormuz crisis changed, America’s decision also changed and the market got this new relief.