US extends Russian oil waiver amid Iran war price surges

• The extension is designed to ease soaring global energy costs triggered by the US-Iran war.
• US lawmakers are condemning the move, arguing it inadvertently provides financial relief to Moscow amid its invasion of Ukraine.
• Market experts warn that Washington's strategies and tools for managing the current energy crisis are running dangerously low.
• EU leadership insists that economic pressure on Russia must remain strict, rejecting any easing of sanctions.

On Friday, the Trump administration extended a waiver that permits nations to purchase sanctioned Russian maritime oil for roughly another month. 

This decision comes despite heavy criticism from lawmakers who claim the government is being too lenient on Moscow amid the ongoing war in Ukraine.

Valid through May 16, the Treasury Department's exemption allows countries to buy Russian crude and petroleum products currently loaded on ships. 

It supersedes a previous 30-day waiver that ended on April 11, though it strictly prohibits any transactions with Iran, Cuba, or North Korea.

This policy aims to rein in global energy costs, which have spiked significantly due to the US-‘Israeli’ war with Iran. 

The decision follows intense lobbying from Asian nations struggling with the energy crisis, who urged Washington to open up alternative market supplies.

Read more: Iran reinstates restrictions on Strait of Hormuz amid escalating US tensions

Treasury's Abrupt Pivot

 A spokesperson for the department stated, "With negotiations accelerating, the Treasury aims to guarantee that oil remains accessible to those who require it".

This marks a sharp pivot; only two days prior, Treasury Secretary Scott Bessent had declared that the US would not extend the Russian oil waiver, nor a separate Iranian oil waiver scheduled to expire this Sunday.

Read more: US will not extend waiver on Russia oil sanctions: Treasury chief

Following Iran's temporary reopening of the Strait of Hormuz -a critical Gulf oil chokepoint- global crude prices dropped 9% to roughly $90 a barrel on Friday. 

Nevertheless, the International Energy Agency noted that the conflict has already triggered the most severe global energy supply shock on record.

Now entering its eighth week on Saturday, the war has resulted in damage to over 80 Middle Eastern oil and gas sites. 

Following through on its previous warnings, Tehran has officially shut the Strait of Hormuz once again in response to the US Navy's ongoing blockade of Iranian harbors.

Surging oil costs present a significant political risk for US President Donald Trump's Republican party as November's midterm elections approach.

Trump is also navigating intense pressure from international allies regarding fuel costs. According to a US source stated to Reuters, allied nations attending the G20, World Bank, and IMF summits in Washington this week directly asked the US to prolong the waiver.

Additionally, the US President discussed oil matters during a recent phone call with Indian Prime Minister Narendra Modi, whose country is a major buyer of Russian crude.

Issued on March 20, the separate Iranian oil waiver permitted roughly 140 million barrels to hit the global market, effectively easing the strain on energy supplies, according to Bessent's remarks last month.

Long-Term Strategic Fallout

Bipartisan U.S. lawmakers have heavily criticized the administration's use of sanctions waivers. They argue these measures financially bolster Iran while it is actively at war with the US, as well as Russia amid its ongoing conflict with Ukraine.

These exemptions risk undermining Western attempts to choke off Russia's war funding and could create friction between Washington and its European partners.

Highlighting this tension, European Commission President Ursula von der Leyen explicitly stated that now is not the time to relax sanctions against Russia.

According to Kirill Dmitriev, a special envoy to Russian President Vladimir Putin, extending the US waiver will encompass an additional 100 million barrels of Russian crude, raising the combined volume impacted by the two waivers to 200 million barrels.