Market News

(Bloomberg) -- The US issued a second authorization letting countries buy more Russian oil that’s stuck on tankers due to sanctions, part of the White House’s push to prevent prices from surging.

The temporary move, which widens a waiver given to India last week, only applies to oil already in transit and as such won’t provide significant financial support for the Russian government, Treasury Secretary Scott Bessent, in a social media post.ent oil has soared about 40% since the Iran war began, driving up fuel prices at the pump globally, including gasoline in the US. The conflict has led to the effective closure of the Strait of Hormuz, the world’s most-important energy-shipping channel, choking the flow of a fifth of the world’s oil.

It’s unclear how much extra oil the step will free up in practice and it represents a fraction of what’s been lost because of the Hormuz turmoil this month. India had a week from the first waiver to snap up on-water cargoes and quickly took 30 million barrels. That means there are fewer available now.

“Of course any supply helps, but this is a smaller help than it looks,” said Robert Rennie, head of commodity research at Westpac Banking Corp. “We are only really talking about replacing maybe four or five days of lost Gulf exports. Sure, it helps, but it is no panacea.”

Out of 125 million to 150 million barrels of Russian crude on the water, about a third is off China and likely to end up in storage, with 30 million to 40 million barrels near India and likely to be consumed there, Rennie said. The rest is in the Mediterranean and the Atlantic, he said.

Historic Disruption

The International Energy Agency estimated on Thursday that Middle East producers will cut their collective output by close to 250 million barrels this month, while shipments through Hormuz will decline by over 600 million barrels of crude and fuels. Up to about a third that theoretically might be diverted via pipelines that bypass the waterway.

The US government has taken several other steps to tame the impact of the disruption, which the IEA said is the biggest supply disruption in the history of the oil market.

It’s releasing of 172 million barrels from its emergency oil reserve and has floated other ideas, ranging from intervention in the futures markets, to waiving a century-old law that requires US ships be used to transport goods between American ports.