US Extends Waiver on Russian Oil Sanctions Despite Energy Secretary's Earlier Denial

The Trump administration extended until May 16 a waiver allowing purchase of Russian oil already loaded on vessels, despite Treasury Secretary Scott Bessent previously denying such a waiver would be granted. The US justifies the extension as necessary to address energy shortages caused by Iran's closure of the Strait of Hormuz, which normally handles 20% of global oil and LNG transport, amid the US-Israel war with Iran. Ukrainian President Volodymyr Zelensky condemned the decision, arguing the $10 billion from Russia's 110-tanker shadow fleet carrying 12 million tons of oil directly funds Moscow's military operations, which launched over 2,360 drones and 1,320 bombs at Ukraine in the past week alone. The waiver, initially issued March 13 and widely condemned by Zelensky and European allies, highlights tensions between addressing immediate energy crises and maintaining sanctions pressure on Russia, which controls 20% of Ukrainian territory in an ongoing stalemate.

US Extension of Russian Oil Sanctions Waiver

• ▪The United States extended a waiver allowing countries to purchase Russian oil and petroleum products already loaded on vessels at sea until 16 May
• ▪The United States argued the waiver is meant to ease the energy supply crunch sparked by the US-Israel war with Iran
• ▪The United States initially issued the waiver easing Russian oil sanctions on 13 March

Iran Conflict's Impact on Global Energy Markets

• ▪Efforts led by the United States to end the war in Ukraine have been put on hold as a result of the war in Iran
• ▪The closure of the Strait of Hormuz has led to turmoil in energy markets with fears that a world recession may ensue if it is not reopened soon
• ▪Iran has virtually shut the Strait of Hormuz, the narrow passage where approximately 20% of the world's oil and liquefied natural gas is usually transported

Ukraine's Condemnation and Ongoing War Dynamics

• ▪Russia launched over 2,360 attack drones, more than 1,320 guided aerial bombs, and nearly 60 missiles of various types at Ukrainian cities and communities over the past week, according to Volodymyr Zelensky
• ▪A stalemate has been reached in the war in Ukraine, with Russia in control of about 20% of Ukrainian territory
• ▪Russia has more than 110 tankers from its shadow fleet with over 12 million tons of oil, according to Volodymyr Zelensky
• ▪Volodymyr Zelensky stated that the sale of Russian shadow fleet oil would bring $10 billion to Moscow's coffers as a resource directly converted into new strikes against Ukraine
• ▪The US move to ease Russian sanctions on 13 March was widely condemned by Volodymyr Zelensky and European allies
• ▪Volodymyr Zelensky stated that every dollar paid for Russian oil is money for the war in Ukraine
• ▪Widespread sanctions have been in place against Russia since President Vladimir Putin launched a full-scale invasion of Ukraine in February 2022
• ▪Ukrainian President Volodymyr Zelensky condemned the US decision to extend the period during which Russia is allowed to sell oil despite Western sanctions

Perspective of European allies

• ▪European allies condemned the March 13 waiver as contradicting the collective effort to economically isolate Russia for its Ukraine invasion

Perspective of Russia

• ▪Russia's shadow fleet of over 110 tankers positions Moscow to capitalize on the US sanctions waiver for significant oil revenue