The German chancellor, Friedrich Merz, has issued a sharp rebuke to the US government over its decision to temporarily lift sanctions on the sale of Russian oil in the wake of sharply rising energy prices, saying the decision was wrong.
He was reacting to Washington’s decision to temporarily waive sanctions on Russian oil stranded at sea as Trump administration officials attempt to reverse a surge in prices that is causing mounting apprehension about global supplies.
“We believe it is wrong to ease the sanctions,” Merz said on Friday morning.
“Unfortunately, Russia continues to show no willingness to negotiate. We will therefore, and must, further increase the pressure on Moscow.”
Merz insisted that support for Ukraine should continue despite the conflict in the Middle East, saying: “We will not allow ourselves to be deterred or distracted from this by the war with Iran.”
His economics minister, Katherina Reiche, expressed her concern “that we might continue to fill Putin’s war coffers”, as the Russian economy was benefiting from the US-Israeli war against Iran, and that action should be taken to prevent this.
The comments followed similar pushback from the French president, Emmanuel Macron, who said after a call with other G7 leaders over the economic ramifications of the war in Iran that the paralysis of the strait of Hormuz “in no way” justified lifting sanctions on Russia.
Moscow claimed on Friday it was “increasingly inevitable” that Washington would lift the sanctions. The US was “effectively acknowledging the obvious: without Russian oil, the global energy market cannot remain stable”, Russia’s economic envoy, Kirill Dmitriev, wrote on Telegram.
Scott Bessent, the US Treasury secretary, announced a “temporary authorisation” late on Thursday, allowing countries to buy the stranded Russian oil for 30 days. Trump was “working to keep prices low”, he said, after average US fuel prices rose by 65 cents per gallon in a month.
“This narrowly tailored, short-term measure applies only to oil already in transit and will not provide significant financial benefit to the Russian government, which derives the majority of its energy revenue from taxes assessed at the point of extraction,” Bessent claimed.
Brent crude, the international benchmark, remained above $100 a barrel during early trading on Friday despite this latest in a string of measures designed to soothe concerns around the economic impact of the US-Israel warn on Iran.
The Middle East conflict has all but closed the strait of Hormuz, one of the most important arteries in global trade, through which about a fifth of the world’s oil and seaborne gas tankers typically pass.
While the Trump administration has repeatedly promised to escort vessels through the strait, activity has yet to recover. The Iranian regime has declared that it will not allow “one litre of oil” to be exported from the region while US and Israeli attacks continue.
The Trump administration last week permitted Indian refiners to temporarily buy Russian oil for 30 days. A month earlier Trump claimed India had agreed to stop purchasing it, in a shift that he said would “help END THE WAR in Ukraine” by cutting off a vital source of funds for Russia.
On Friday, at a briefing on the strait of Hormuz, Lloyd’s List, which issues information on global maritime and shipping logistics intelligence, said oil tankers carrying Russian oil were being immediately rerouted to India, due to sanctions having been lifted. Analysts for Lloyd’s List said that the Kremlin would benefit financially from the move.
Bridget Diakun, senior risk analyst at Lloyd’s List Intelligence, said: “The Russian shadow fleet has already started to adjust for India. We instantaneously saw ships, shadow fleet tankers, sanctioned ones, non-sanctioned ones, making U-turns, diverting course. They were initially going towards Malaysia or to China, and they completely turned around and started heading for India.” She said India was at this point “able to outbid the buyers in China. And this entire situation, lifting sanctions … is a godsend for Russia’s shadow fleet. They’re in a position where now Russia can make a lot of money because it’s [been] given a pass.”
There were about 124m barrels of Russian-origin oil on water across the world as of Thursday, Fox News reported.
Brent crude was up 0.3% at $100.74 a barrel after Bessent’s announcement, having broken above $100 earlier this week for the first time since Russia’s invasion of Ukraine four years ago. At the start of the year the oil price was about $60 a barrel.
The International Energy Agency, the world’s energy watchdog, ordered the largest release of government reserves in its history on Wednesday, when its 32 members unanimously agreed to release 400m barrels of emergency crude.
But continuing strikes across the Middle East have overshadowed such efforts, as Iran stepped up retaliatory strikes on economic targets in the region. It goaded the US to “get ready for oil to be $200 a barrel” after Trump’s attempt to topple the regime in Tehran.
Iran started to lay mines on Thursday in the strait of Hormuz, the New York Times reported, citing US officials.
Trump has tried in recent days to play down concerns about high oil prices. “The United States is the largest Oil Producer in the World, by far, so when oil prices go up, we make a lot of money,” he wrote on social media on Thursday. “BUT, of far greater interest and importance to me, as President, is stoping [sic] an evil Empire, Iran, from having Nuclear Weapons, and destroying the Middle East and, indeed, the World. I won’t ever let that happen!”
As November’s midterm elections loom, however, higher fuel prices could pose a challenge for Trump, with his Republican allies defending their small majorities in the Senate and House of Representatives.
