Trump Administration Greenlights Acquisition of Russian Oil Already in Transit

The U.S. Treasury has authorized the purchase of Russian oil that is already en route, a decision announced by Treasury Secretary Scott Bessent on Thursday. This action marks a significant shift in the Trump administration's approach to wartime sanctions affecting Russia's oil sector, as the world faces soaring oil prices.

This temporary measure, effective for one month, specifically targets petroleum products loaded onto vessels on or before Thursday, as outlined in Treasury documents. Bessent emphasized that this decision aims to "allow countries to acquire Russian oil currently stranded at sea."

He further clarified, "This narrowly tailored, short-term measure applies only to oil already in transit and will not provide significant financial benefit to the Russian government, which derives the majority of its energy revenue from taxes assessed at the point of extraction," a statement he shared on X.

Currently, approximately 124 million barrels of Russian oil are reported to be at sea globally. The administration's intent is to "enhance the global reach of existing supply," particularly as tensions between the U.S. and Israel against Iran disrupt petroleum trade and push oil prices to their highest levels in years.

Last week, a more limited sanctions license was issued, permitting India to purchase Russian oil and petroleum products for a month, despite previous pressure from the Trump administration for India to cease such transactions.

This recent policy shift provides oil importers with a temporary reprieve from stringent U.S. sanctions that have complicated business dealings with significant portions of the Russian economy, particularly its energy sector. Since Russia's full-scale invasion of Ukraine in 2022, it has faced extensive sanctions.

However, these temporary measures have sparked backlash from congressional Democrats, who argue that they could inadvertently enrich President Vladimir Putin's regime and weaken sanctions intended to hinder Russia's war financing efforts against Ukraine.

Democratic Senator Brian Schatz of Hawaii expressed his concerns on X late Thursday, suggesting that the situation appears to favor Russia: "Looks like we fought Iran and Russia won."

In a joint statement last week, Senate Minority Leader Chuck Schumer and 11 other Democrats criticized the Trump administration for allowing India to purchase Russian oil. They contended that rising oil prices have already provided Putin with substantial financial gains, and loosening sanctions could exacerbate this issue.

"Instead of changing course, the President is only making this situation worse by handing Putin, his shadow fleet, and traders still dealing in sanctioned oil a free pass to increase oil shipments to Russia's second-largest importer," they stated. "The new channels for evasion the President is opening, coupled with dramatically higher global energy prices, are giving Putin a huge financial boost and the means to continue his bloody war in Ukraine."

Just a day prior to the announcement of Thursday's sanctions license, Russian envoy Kirill Dmitriev met with U.S. negotiators Steve Witkoff and Jared Kushner in Florida. Dmitriev later remarked that discussions revolved around the "current crisis on global energy markets," suggesting that the U.S. and other nations are beginning to recognize the "destructive nature of sanctions against Russia," according to translations from Russian news agency Interfax. Witkoff noted they covered "a variety of topics."

Following the U.S. announcement, Dmitriev took to X to assert: "Russian energy is indispensable to easing the world's largest energy crisis. EU bureaucrats will soon be forced to recognize this reality, acknowledge their strategic blunders, and atone."

In contrast, the U.K. has stated it will not lift its own oil sanctions against Russia. "This is an absolutely critical moment in the Russian aggression against Ukraine and sanctions are important," said Michael Shanks, U.K. Minister for Energy. "What we absolutely can't have is Putin sitting in the Kremlin thinking this is an opportunity to invest more in the war machine."

French President Emmanuel Macron also voiced his disagreement with easing sanctions after a G7 meeting focused on the economic repercussions of the Middle Eastern conflict. He stated that lifting sanctions on Russia would not be justified and emphasized the need for continued support for Ukraine.

The Trump administration is navigating a supply crunch exacerbated by ongoing conflicts. Shipping through the Strait of Hormuz—a critical passage for 20% of global oil—has significantly slowed due to Iranian threats against vessels, limiting oil flow from major Arab producers.

The international oil benchmark, Brent Crude, hovered just above $100 per barrel for much of Thursday afternoon, a stark increase from around $72 per barrel prior to the onset of war in late February.

In response to supply challenges, President Trump and senior officials have proposed various strategies to boost oil availability. Plans include releasing 172 million barrels from the U.S. Strategic Petroleum Reserve and considering naval escorts for ships through the Strait of Hormuz or even taking control of the strait itself, as he mentioned earlier this week.