A temporary suspension of import restrictions on Russian and Iranian oil, enacted by the previous US administration earlier this month to counter energy price spikes triggered by conflict in the Middle East, has yielded uneven results. Due to the short duration of the waivers and persistent compliance risks, trading volumes have not returned to normal and a stark contrast has emerged: buyers are actively purchasing Russian crude, while adopting a much more cautious stance towards Iranian crude. Furthermore, the US move has frustrated allies who are concerned it could undermine economic pressure on both Russia and Iran, potentially achieving neither objective.
The energy crisis was ignited by a full-scale escalation of tensions in the Middle East, particularly disruptions to shipping through the Strait of Hormuz, which threatened to interrupt the global supply of millions of barrels of crude per day. Facing an imminent supply shortfall, the administration adopted a pragmatic intervention strategy, formally issuing a 30-day temporary waiver on March 12th for seaborne Russian crude. This policy allowed global buyers (excluding specific embargoed regions) to receive and pay for cargoes of Russian oil already loaded onto tankers at sea without violating sanctions.
This measure quickly stimulated market activity. Data indicates that approximately 18 tankers east of the Suez Canal, carrying around 13.5 million barrels of Russian crude, were potentially available for purchase. This number represents a decrease compared to two weeks prior when the waiver scope was expanded, at which time 25 tankers held about 19 million barrels. Although more cargoes have entered the region via the Suez Canal, the number of tankers has still declined. Most tankers are listed as "for sale," indicating they have not yet found firm buyers. One tanker's destination was shown as near Singapore, a common hub for crude oil awaiting sale. Seven tankers were loaded with Russia's flagship Urals crude, a grade similar in quality to much of the Middle Eastern crude affected by the conflict.
In contrast, the market reception for Iranian crude has been considerably quieter. Since Iran received its waiver last Friday, the volume of its crude held in floating storage at sea has remained largely steady at around 27 million barrels. State-owned enterprises in countries like India have paused purchases due to challenges related to payment, insurance, and sourcing compliant vessels. Floating storage typically refers to oil held on tankers idle at sea for at least a week; its scale can serve as an indicator of available supply, but excludes cargoes potentially onboard tankers in transit.
Market analysis suggests this differential response stems primarily from buyers' long-standing apprehension about the complexity of sanctions on Iran. Unlike Russia, where alternative arrangements for bank settlements and insurance may still exist, the payment mechanisms and vessel tracking risks associated with Iranian crude present greater hurdles for compliance departments. Many international banks and insurers fear the 30-day window is insufficient for completing complex transaction compliance reviews and worry about potential retrospective sanctions pressure once the waiver expires. This "compliance inertia" has directly resulted in Iranian cargoes continuing to drift at sea.
The founder of Singapore-based consultancy Vanda Insights noted that countries are likely to be more hesitant about buying Iranian crude under the US waiver compared to Russian crude. Concerns exist regarding the quality of Iranian crude and questions surround its payment mechanisms, issues not present with Russian crude.