December 5, 2022

Indian oil purchases are not subject to price caps, according to the US

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The United States is happy for India to continue buying as much Russian oil as it wants, including at prices above a G7-imposed price cap. If India opts out of Western insurance, finance and maritime services bound by the cap, U.S. Treasury Secretary Janet Yellen says.

The cap would still drive global oil prices lower while curbing Russia’s revenues, she said in an interview with Reuters. India is now Russia’s largest oil customer other than China. “Russia is going to find it very difficult to continue shipping as much oil,” Yellen said. Final details of the price cap to be imposed by G7 democracies and Australia are still coming together ahead of a Dec. 5 deadline.

The existence of such a cap would give India, China and other major buyers of Russian crude leverage to push down the price they pay to Moscow.

The cap is intended to cut Russia’s oil revenues while keeping Russian crude on the market by denying insurance, maritime services and finance provided by the Western allies for tanker cargoes priced above a fixed dollar-per barrel cap.

The cap is a concept promoted by the United States since the EU first laid out plans in May for an oil embargo on Russia. India’s foreign minister said last week that his country would continue to buy Russian crude because it benefits India.

“We believe most countries are comfortable with it and it is in no one’s case that Russian oil should go offline,” an official said, speaking on condition of anonymity. The oil industry will find it difficult to sell all the oil they have been selling without a high price, Federal Reserve chair Janet Yellen has said in an interview with the BBC’s economics editor Robert Peston for her book “The World’s Oil Tanker”, published this week.

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