US grants temporary waiver for Russian crude imports; Delhi orders refiners to maximise LPG output

India scrambles for fuel as Hormuz tanker traffic grinds to a halt, Qatar forecasts crude oil at $150/barrel

February 06, 2026, dmanewsdesk: The US has given India a “temporary” green light to buy Russian crude without facing punitive tariffs, while the Indian government has ordered refiners to ramp up LPG output to avert a shortage of cooking gas as a result of the Middle East war.

Meanwhile, Qatar’s energy minister has told The Financial Times that the war could shut down Gulf energy production within weeks, push oil prices up to $150 a barrel and “bring down the economies of the world”.

Qatar, the world’s second-largest LNG producer, halted production this week after an Iranian drone strike on its Ras Laffan plant, its largest liquefied natural gas facility.

Saad al-Kaabi told the FT that even if the conflict ended immediately it would still take Qatar “weeks to months” to restore its normal delivery schedule.

In India, all oil refiners have been asked to “maximise and ensure that propane and butane available with them are utilised for production” for cooking gas, a government order says. The Middle East normally provides most of India’s LPG, which is a mixture of propane and butane.

India is scrambling to secure enough energy supplies following the collapse of tanker traffic through the Strait of Hormuz, one of the world’s most crucial oil shipping lanes.

The US Treasury said it will grant Indian refiners a short-term waiver to purchase Russian cargoes already at sea. “To enable oil to keep flowing into the global market, the treasury department is issuing a temporary 30-day waiver to allow Indian refiners to purchase Russian oil,” Treasury Secretary Scott Bessent said.

“This deliberately short-term measure will not provide significant financial benefit to the Russian government as it only authorises transactions involving oil already stranded at sea,” he added.

Bessent described the waiver as a stopgap measure while Washington continues to push India to buy more US crude instead.

“This stopgap measure will alleviate pressure caused by Iran’s attempt to take global energy hostage,” he said.

There is increasing alarm across the Gulf about the economic fallout from the war between the US and Israel on one side and Iran on the other.

“This will bring down the economies of the world,” the Qatar minister said. “If this war continues for a few weeks, GDP growth around the world will be impacted. Everybody’s energy price is going to go higher. There will be shortages of some products and there will be a chain reaction of factories that cannot supply.”

He predicted crude prices could surge to $150 a barrel within two to three weeks if tankers and other merchant ships were unable to pass through the Strait of Hormuz, through which about a fifth of the world’s oil and gas moves. Gas prices, he forecast, could climb to $40 per million British thermal units, almost four times the level seen before the conflict began.

The route is particularly vital for India, which relies heavily on Gulf producers for both crude oil and LNG.

India imports about 85 per cent of its crude oil needs and 45 to 50 per cent of its LNG requirements. About 40 per cent of India’s oil imports normally transit through Hormuz where tanker traffic has ground to a halt.

Because the crude shipments India is buying are already moving through the market, Delhi will have to pay prevailing spot prices rather than negotiate the discounted rates from Russia that it previously enjoyed.

This is bad news for India with oil now heading for its biggest weekly rise since 2022, according to traders. Goldman Sachs has warned that prices could climb above $100 a barrel while JP Morgan said the price could hit $120.

India has already snapped up the cargoes of two ships carrying Russian crude that were sailing in nearby waters. Each tanker is carrying roughly 700,000 barrels of oil. A third Russian tanker has also changed course and is believed to be heading to an Indian port.

In total, about 9.5 million barrels of Russian crude are currently on vessels close to India, according to estimates cited by Reuters.

Globally, the Russian volumes stranded at sea are far larger. Data from the trade intelligence firm Kpler suggests that roughly 130 million barrels of Russian crude are currently on tankers around the world.

“India will buy more Russian oil,” said Sumit Ritolia, lead analyst at Kpler, which tracks global crude flows and tanker movements. “Significant volumes of this are across the Indian Ocean, Red Sea and Suez, and around Singapore, which could potentially be redirected to Indian ports if commercial deals are finalised,” he added.

However, “competition from Chinese buyers for the same barrels could limit the extent of India’s benefit,” Ritolia noted. Even so, the crude currently close to India could help provide an important buffer if Gulf supplies remain uncertain.

Meanwhile, as it seeks to protect domestic household fuel supplies, India has ordered oil refiners to maximise production of LPG and supply it to the three state-run fuel retailers: IndianOil, Hindustan Petroleum and Bharat Petroleum.

Officials have also barred refiners from diverting propane and butane to petrochemical production, forcing them to prioritise LPG over industrial output. The three companies have been directed to sell the fuel to domestic customers only.

State-run companies including Indian Oil, Bharat Petroleum, Hindustan Petroleum and Mangalore Refinery and Petrochemicals are also in talks with traders to take prompt deliveries of Russian cargoes. Indian state refiners are reported to have bought about 20 million barrels of Russian oil from traders so far.

Russia says it is willing to divert extra crude shipments to India and has also offered to send more LNG. Analysts estimate India’s LNG stocks could last only 15 to 20 days.

India imported about 27.9 million metric tonnes of LNG in 2024 and Russia supplied about 10 per cent of that amount. If Russia redirected supply from new LNG projects towards India, the volumes could grow significantly over the medium term, but the amount it could offer immediately is limited, traders say.

Source: The Telegraph online