For years, the US has prevented the sale of Iranian oil and fuels to most of the world. Yet, Washington is now facilitating oil sales from a country against whom it is waging a war. After announcing a month-long sanctions waiver for purchase of Russian crude already in tankers on water, the US has now suspended for a month the sanctions on Iranian crude already loaded on tankers.The Donald Trump administration is evidently desperate, as the raging West Asia conflict has sent global oil prices soaring to multi-year highs, which in turn have led to a jump in fuel prices in the US.Trump’s objective is clear — allow as many barrels of oil as possible to flow into the international market to improve the global oil supply situation and curb spiralling crude oil prices. Major supply gaps would lead to a surge in oil prices on a sustained basis, and the Trump administration doesn’t want that in a midterm election year. Low energy prices were a key election plank in Trump’s presidential campaign.For years now, over 90% of Iranian oil exports have been going to one country— China. Technically, this move will not really increase the global oil supply — Iranian oil was already part of it with China’s purchases — but will enable other countries also to buy Tehran’s oil.How the US sanctions waiver for Iranian crude will workThe West Asia conflict has led to a spike in international oil prices. Global benchmark Brent crude ended the week on Friday at around $112 per barrel, 53% higher than the pre-conflict levels.So, the Trump administration is coming up with these short-term fixes that may not have too much of an impact on prices on a sustained basis, so long as the critical maritime chokepoint of the Strait of Hormuz remains effectively closed and energy infrastructure in West Asia keeps coming under attack.Story continues below this adNonetheless, India could very well be among the major beneficiaries of this temporary sanctions waiver. Iran used to be a major oil supplier to India, but New Delhi stopped importing Iranian crude after the first Donald Trump administration imposed heavy sanctions on Tehran and ended sanction waivers to major buyers of Iranian crude.According to the general license issued by the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury in this regard, transactions related to the sale, delivery, or offloading of crude oil and petroleum products of Iranian origin — loaded on any vessel, including tankers sanctioned by the US, as of 12:01 eastern daylight time (9:31 am India time) on March 20 — are authorised till April 19.Also Read | US has allowed 30-day sale of Iran oil at sea to curb prices. Can India benefit?According to US Treasury Secretary Scott Bessent, this move will make around 140 million barrels of Iranian oil available to the global market. Earlier, he had said that this volume translated to “10 days to two weeks of supply that the Iranians had been pushing out that would have all gone to China”.Vessel movements through the Strait of Hormuz have effectively been halted due to the conflict that began on February 28. The Strait accounted for one-fifth of global oil and liquefied natural gas (LNG) flows. Its effective closure by Iran, along with attacks on energy infrastructure in the region, have led to a surge in global oil prices. While some oil volumes are being evacuated from West Asia through a couple of other alternative routes that bypass the Strait, a bulk of the supply through the narrow waterway has effectively gone offline. According to industry watchers and experts, the US-sanctioned Iranian oil, however, continues to flow through the Strait.Story continues below this ad“In response to Iran’s terrorist attacks against global energy infrastructure, the Trump Administration will continue to deploy America’s economic and military might to maximize the flow of energy to the world, strengthen global supply, and seek to ensure market stability,” Bessent posted on X early Saturday (India time), as he announced the sanctions waiver.“Today, the Department of the Treasury is issuing a narrowly tailored, short-term authorization permitting the sale of Iranian oil currently stranded at sea. At present, sanctioned Iranian oil is being hoarded by China on the cheap. By temporarily unlocking this existing supply for the world, the United States will quickly bring approximately 140 million barrels of oil to global markets, expanding the amount of worldwide energy and helping to relieve the temporary pressures on supply caused by Iran,” Bessent said, adding that “in essence”, the US will be using “Iranian barrels against Tehran”.He also said that Iran will have difficulty accessing any revenue generated from the sale of oil already on water, and the US will continue to maintain maximum pressure on Iran and its ability to access the international financial system.“So far, the Trump Administration has been working to bring around 440 million additional barrels of oil to the global market, undercutting Iran’s ability to leverage its disruptions in the Strait of Hormuz,” Bessent added.The possibilities for IndiaStory continues below this adOn Friday, when the waiver had not been announced yet, Petroleum Ministry Joint Secretary Sujata Sharma was asked if India would be keen on importing Iranian crude if Washington indeed announced such a move. Sharma that it was a hypothetical question at that stage. Nonetheless, industry analysts say that the US move could see Indian refiners capitalise on the opportunity, just like they did by ramping up imports of Russian crude in recent weeks. Amid the tight global supply situation, every barrel counts.“India could emerge as a key demand centre to watch, alongside Chinese buyers and other Asian countries. Historically, India was a major buyer of Iranian crude, importing significant volumes of Iranian light and heavy (crude) grades due to strong refinery compatibility and favourable commercial terms. Following sanctions tightening in 2018, imports ceased from May 2019, with volumes replaced by Middle Eastern, US and other grades,” said Sumit Ritolia, lead research analyst, refining & modeling, at Kpler, a commodity market analytics firm.Also Read | Why US is weighing Kharg Island takeover — and why this is a major riskCurrently, Iranian crude availability is high, with an estimated 170 million barrels on the water, including floating storage and cargoes in transit, as per Kpler data. While part of these volumes is committed, a portion remains unsold, representing potential incremental supply. Through this move, the US has effectively increased competition for Iranian barrels among potential buyers and China. While it may lead to erosion of discounts on Iranian oil, major oil importers would still be keen as in the current scenario, supply security is being prioritised over price considerations.Around 2.5–2.7 million bpd of India’s crude imports — around half of the overall oil imports — have transited the Strait in recent months, while the longer-term average is around 40%. India depends on imports to meet over 88% of its requirement of crude oil. At the global level, around 20 million barrels a day of crude oil usually passes through the Strait of Hormuz.Story continues below this adAccording to Ritolia, Indian refiners retain the ability to re-integrate Iranian barrels with minimal operational adjustments at their refineries, given their prior experience in processing Iranian oil and the presence of established trading setups. Key considerations for Indian refiners to tap into Iranian barrels would primarily include the scope and durability of sanctions relief, pricing structure, and the availability of payment, insurance, and logistics mechanisms.“If these conditions align, a ramp-up in Indian imports of Iranian crude could be significant, similar to the rapid increase observed in Russian crude intake following the easing of Western sanctions,” Ritolia said.According to tanker data from Kpler, India’s Russian oil imports so far in March have surged to 1.8 million barrels per day (bpd), from 1 million bpd in February. The pre-war expectation for India’s Russian oil imports in March was around 0.8-0.9 million bpd. Now, they could even reach 2-2.2 million bpd — the peak levels of 2025. This ramp-up was necessitated by the Strait of Hormuz’s effective closure, which hit nearly half of India’s oil imports. Washington’s waiver on purchases of sanctioned Russian crude on water also supported this shift.Looking back at India’s oil trade with IranIndia has not imported any oil from Iran since May 2019, after the expiration of the sanctions waiver that the US had provided to major buyers of Iranian oil. Not complying with American sanctions would have made Indian oil companies vulnerable to secondary sanctions from Washington. Prior to that, India had been a regular buyer of Iranian oil, even during previous sanctions periods of the pre-Trump era, when import volumes of Iranian crude declined, but were still not insignificant.Story continues below this adBack in 2009-10, India imported 22.1 million tonnes of crude oil from Iran and it accounted for 14.4% of India’s overall oil import of 153.6 million tonnes in that year, according to data from the Ministry of Commerce and Industry. But as international sanctions on Iran intensified, hitting payment channels and creating other logistical hurdles, the volumes declined — to 16.1 million tonnes in 2010-11, 14.9 million tonnes in 2011-12, 13.2 million tonnes in 2012-13, 11.3 million tonnes in 2013-14 and 11.2 million tonnes in 2014-15.Graphs, Data and Perspectives | Amid West Asia war, why central banks are between a rock and hard placeDuring the peak sanctions period — 2012 to 2015 — India was buying Iranian oil through a mutually-agreed payment mechanism. Under that system, Indian refiners paid 45% of the oil payments in rupees into an account held by Iranian banks in India, and Iran used that money to buy Indian goods. The remainder of the payments were deferred until sanctions were lifted. The sanctions were formally lifted as part of the Iran nuclear deal, after which pending oil payments by Indian refiners were cleared. Major Indian buyers of Iranian oil in this period were Essar Oil (now Nayara Energy) and Mangalore Refinery and Petrochemicals (MRPL).With the sanctions effectively withdrawn, Indian refiners started ramping up oil imports from Iran. India imported 13.6 million tonnes of Iranian oil in 2015-16, and the volumes shot up to 27.1 million tonnes in 2016-17, making Tehran the third-largest source of India’s oil imports behind Saudi Arabia and Iraq. Iran also did its bit to boost India’s purchases of its oil by offering discounted shipping and extended credit periods to Indian refiners. In 2016-17, Iranian oil made up 12.6% of India’s total crude oil imports of almost 215 million tonnes.In 2017-18, the Iranian oil volumes declined to 22.6 million tonnes due to a few reasons — tensions between New Delhi and Tehran over the development rights of a gas field in Iran, India’s diversification of its supply and the first Donald Trump presidency. The last factor was the defining one over the next two years as Trump walked away from the Iran nuclear deal and re-imposed sanctions. A waiver was given by the US to major buyers of Iranian oil, which expired in 2019. In 2017-18, India’s Iranian oil imports were at 23.9 million tonnes, and crashed to just 2 million tonnes in 2019-20. No Iranian oil came to India after May 2019.