US allows temporary purchase of Russian oil stranded at sea to stabilize energy markets

HOUSTON, United States

The US on Thursday announced it has temporarily authorized the purchase of Russian oil stranded at sea to stabilize energy markets, according to media reports.

There are nearly 124 million barrels of Russia-origin oil at sea across 30 locations globally as of March 12, CNBC reported, enough crude oil to cover about five to six days of supply.

"The temporary increase in oil prices is a short-term and temporary disruption that will result in a massive benefit to our nation and economy in the long-term," US Treasury Secretary Scott Bessent said in a statement.

He noted that the Russian oil being purchased is already stranded at sea due to Iran closing the Strait of Hormuz, describing the move as a "narrowly tailored, short-term measure" that applies only to oil already in transit.

Oil prices have spiked sharply since the start of the Iran war. Before the conflict began, the price per barrel of crude oil was between $60 and $70. As of the beginning of this week, the price has nearly doubled to between $100 and $120 per barrel.

Bessent emphasized that the temporary measure will not provide "significant financial benefit to the Russian government."

He explained that Moscow receives the majority of its energy revenue from taxes assessed at the point of extraction.

The Treasury Department’s exemption allowing the US to purchase Russian oil already at sea will expire on April 11.

According to CNBC, the G7 and the European Union have imposed sanctions on Russian oil following its invasion of Ukraine in 2022, including a price cap of $44.10 per barrel.

The EU has also committed to phasing out all remaining oil imports from Russia by the end of 2027.

In 2022, then-US President Joe Biden banned the import of Russian oil, liquefied natural gas, and coal into the United States.