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International Relations April 25, 2026 8 min read Daily brief · #28 of 28

U.S. won't renew Iranian, Russian oil waivers: Bessent

The US Treasury Secretary announced that the United States does not plan to renew a waiver that had allowed certain purchases of Russian petroleum products c...

GS Paper 2 (International Relations) GS Paper 3 (Indian Economy Energy Security)

What Happened

  • The US Treasury Secretary announced that the United States does not plan to renew a waiver that had allowed certain purchases of Russian petroleum products currently at sea, and that renewal of a similar one-time waiver for Iranian oil is entirely off the table.
  • The waivers were originally issued to prevent a sharp disruption in global energy markets caused by the cumulative impact of the Russia-Ukraine war and the US-Israel-Iran conflict.
  • The Treasury renewed one of the waivers two days after the Secretary's initial statement, citing pressure from vulnerable and least-developed importing nations, but reiterated that future renewals would not occur.
  • The Secretary stated that the decision would force Iran to start shutting down oil production within days, further tightening already-disrupted global crude supply.
  • The announcement came against the backdrop of ongoing Hormuz closure and a global energy market under severe stress.

Static Topic Bridges

The United States maintains a comprehensive sanctions regime targeting Iran's energy sector, designed to deny Iran revenue from oil exports. Multiple legislative instruments underpin this regime.

  • CAATSA (Countering America's Adversaries Through Sanctions Act, 2017): Targets Iran, Russia, and North Korea. Mandates secondary sanctions against non-US entities conducting "significant transactions" with sanctioned parties in these countries. The President has limited waiver authority.
  • Iran Freedom and Counter-Proliferation Act (IFCA, 2012): Targets Iran's energy, shipping, and shipbuilding sectors; authorises sanctions on foreign financial institutions dealing in Iranian oil.
  • Iran Sanctions Act (ISA, 1996, extended multiple times): Imposes sanctions on foreign companies making significant investments in Iran's energy sector.
  • Together, these laws create a framework of "secondary sanctions" — they apply not just to US entities but to any foreign person or institution that conducts significant business with Iran, threatening their access to the US financial system.

Connection to this news: The waiver being allowed to lapse represents the activation — or re-activation — of the full force of these secondary sanctions, meaning any country continuing to import Iranian oil risks losing access to US banks, dollar clearing, and the broader US-linked financial system.

Significant Reduction Exceptions (SREs) — The Waiver Mechanism

The key instrument through which the US has managed secondary sanction compliance for oil-importing countries is the Significant Reduction Exception (SRE), colloquially called a "waiver."

  • SREs are issued by the US State Department (for crude oil purchasing countries) under the Iran, North Korea, and Syria Nonproliferation Act and related executive orders.
  • An SRE allows a country to continue purchasing Iranian crude for a defined period (typically 180 days) provided it is reducing the volume of such purchases over time.
  • Eight countries received SREs in November 2018: China, India, South Korea, Japan, Italy, Greece, Turkey, and Taiwan.
  • All SREs were terminated by the US in May 2019 under the "zero tolerance" policy, ending any exceptions for Iranian oil purchases.
  • OFAC (Office of Foreign Assets Control) — part of the US Treasury Department — is the implementing body for most economic sanctions, including enforcement actions against foreign entities.

Connection to this news: The Treasury Secretary's statement signals that no new SRE-type waivers will be issued, and that even the ad hoc one-time waivers extended during the current crisis are being phased out — effectively tightening the economic noose on both Iran and Russia simultaneously.

India's Waiver History — Iran Oil Imports

India was one of the largest importers of Iranian crude before sanctions intensified and has navigated the sanctions landscape carefully.

  • India received an SRE in November 2018 allowing continued Iranian crude purchases.
  • India's SRE was not renewed in May 2019 when the US terminated all exceptions.
  • In the years following, India's Iranian crude imports dropped to near zero to comply with US pressure.
  • India paid for Iranian crude in rupees through UCO Bank (Kolkata) when the dollar payment channel was blocked — a mechanism that also had limited effectiveness post-2019.
  • ONGC Videsh Limited (OVL) has held equity stakes in Iranian fields (notably the Farzad-B gas block) — these investments have been a source of negotiating complexity between India and the US.

Connection to this news: India's prior experience of having its Iran waiver revoked in 2019 provides historical context for the present announcement. India knows the practical and diplomatic costs of non-compliance with US secondary sanctions.

Russian Oil Sanctions — G7 Price Cap and India's Position

Following Russia's invasion of Ukraine in February 2022, the G7 and the European Union introduced a price cap on Russian crude oil as part of their sanctions package.

  • G7 Price Cap: USD 60 per barrel on Russian crude seaborne exports, effective December 5, 2022. A separate cap of USD 100/barrel applies to petroleum products trading above crude (e.g., diesel); USD 45/barrel for those below crude (e.g., fuel oil).
  • The cap works through shipping and insurance: Western-owned/insured vessels and financial services may only be used for Russian crude transactions at or below the cap price.
  • India, China, Turkey: major buyers of Russian crude who are not signatories to the cap. They can buy at any price but risk secondary sanction exposure if they use Western shipping/insurance above the cap.
  • Russia's share of India's crude imports: rose from ~2% in 2021 to ~16% by 2025–26 as Indian refiners took advantage of Russian crude discounts.
  • The waiver the US Treasury is declining to renew refers to a specific OFAC-issued licence allowing purchase of Russian petroleum products currently in transit — a temporary measure to avoid disrupting markets mid-shipment.

Connection to this news: By refusing to renew this Russian oil waiver alongside the Iranian one, the US is simultaneously targeting both its main adversaries' energy revenues — and warning countries like India that the era of informal tolerance for discounted Russian oil purchases may be narrowing.

OFAC (Office of Foreign Assets Control) — Role and Powers

OFAC is the principal US sanctions administration and enforcement authority, operating within the Treasury Department.

  • OFAC administers and enforces economic and trade sanctions based on US foreign policy and national security goals.
  • It maintains the SDN (Specially Designated Nationals and Blocked Persons) list — entities on this list are cut off from the US financial system; their assets in US jurisdiction are frozen.
  • Non-US persons conducting "significant transactions" with SDN-listed entities or in sanctioned sectors risk OFAC designation ("secondary sanctions").
  • OFAC issues licences, including General Licences (broad authorisations) and Specific Licences (case-by-case), which are the legal basis for waivers and exceptions.
  • OFAC's reach extends to dollar-clearing transactions globally: any transaction cleared through a US correspondent bank can be intercepted and scrutinised.

Connection to this news: OFAC's legal architecture is what gives the Treasury Secretary's statement its practical significance — the non-renewal of waivers means OFAC's default enforcement posture (blocking, fines, designations) will apply to further transactions, creating real risk for Indian and other Asian refiners.

US Treasury Secretary's Role in Sanctions Policy

In the US executive branch architecture, the Treasury Secretary has a central role in sanctions, distinct from the Secretary of State.

  • The State Department issues country-level SREs (significant reduction exceptions) for oil.
  • OFAC — under the Treasury Department — issues Specific Licences (including maritime/transit waivers) for energy transactions.
  • The Treasury Secretary can direct OFAC policy and publicly signal future waiver decisions, creating market and diplomatic signals even before formal policy changes.
  • Scott Bessent served as US Treasury Secretary at the time of this announcement (appointed January 2025).

Connection to this news: Bessent's public statements carry official weight — markets and governments treat his signalling on waiver renewals as definitive policy direction, which is why his announcement triggered immediate oil price movements and concern among energy-importing nations including India.

India's Diplomatic and Energy Security Calculus

India's response to US sanctions pressure involves balancing energy security needs against the strategic importance of its relationship with the United States.

  • India is not bound by US domestic law but is exposed to secondary sanctions risk through its use of the dollar-clearing system, Western shipping, and Western insurance (Protection & Indemnity clubs).
  • India has developed workarounds: rupee settlement, shadow fleets, use of non-Western P&I insurance, and Asian financial channels — but these have limitations at scale.
  • India's Ministry of External Affairs has consistently maintained that India makes energy purchase decisions based on its own national interest, while simultaneously engaging diplomatically with the US on concerns.
  • The Indian rupee's partial internationalisation and bilateral currency swap arrangements (with some ASEAN and Gulf states) are long-term hedges against dollar-system vulnerability.

Connection to this news: The end of waivers puts India's energy sourcing strategy under renewed pressure — particularly given that the Hormuz blockade has already cut Middle Eastern supply, and Russia is now also being targeted. India must navigate a tighter global energy market with fewer low-cost sourcing options.

Key Facts & Data

  • CAATSA: Countering America's Adversaries Through Sanctions Act, 2017 — targets Iran, Russia, North Korea
  • OFAC: Office of Foreign Assets Control, US Treasury — principal sanctions enforcement body
  • SRE (Significant Reduction Exception): waiver allowing continued Iranian oil purchases; 8 countries received SREs in November 2018 (including India); all terminated May 2019
  • G7 Russian crude price cap: USD 60/barrel, effective December 5, 2022
  • India's Russian crude share: ~2% (2021) → ~16% (2025–26)
  • India received Iran SRE: November 2018; SRE not renewed: May 2019
  • UCO Bank, Kolkata: processed rupee payments for Iranian crude imports
  • US Treasury Secretary at time of announcement: Scott Bessent
  • ONGC Videsh Limited (OVL): India's overseas upstream investment arm; held Farzad-B gas block interest in Iran
  • Waiver rationale (Bessent): cited impact on "most vulnerable and poorest countries" importing energy
  • Expected Iran impact per Treasury: forced to shutter production within "2–3 days" of waiver expiry
  • SDN list: OFAC's Specially Designated Nationals list — effective financial blacklist
  • India's dollar-clearing exposure: primary channel of secondary sanctions vulnerability for Indian refiners
On this page
  1. What Happened
  2. Static Topic Bridges
  3. US Secondary Sanctions on Iran — Legal Framework
  4. Significant Reduction Exceptions (SREs) — The Waiver Mechanism
  5. India's Waiver History — Iran Oil Imports
  6. Russian Oil Sanctions — G7 Price Cap and India's Position
  7. OFAC (Office of Foreign Assets Control) — Role and Powers
  8. US Treasury Secretary's Role in Sanctions Policy
  9. India's Diplomatic and Energy Security Calculus
  10. Key Facts & Data
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