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India Is Not Subject To A Price Cap And Can Purchase As Much Russian Oil As It Desires, Says US Treasury Secretary


India Is Not Subject To A Price Cap And Can Purchase As Much Russian Oil As It Desires, Says US Treasury Secretary
According to U.S. Treasury Secretary Janet Yellen, India is welcome to continue purchasing as much Russian oil as it likes, even at prices above a G7-imposed price cap mechanism, as long as it stays away from Western insurance, finance, and maritime services that are subject to the cap.
In an interview with Reuters on the sidelines of a conference on strengthening U.S.-Indian economic ties, Yellen stated that the cap would still lower global oil prices while reducing Russia's revenues. Once the European Union stops importing, Russia won't be able to sell as much oil as it does now without using the cap price or significant discounts from current prices, according to Yellen.
"Russia is going to find it very difficult to continue shipping as much oil as they have done when the EU stops buying Russian oil," Yellen said. "They're going to be heavily in search of buyers. And many buyers are reliant on Western services."
Other than China, India is currently Russia's biggest oil customer.
Prior to a deadline of December 5, the last-minute specifics of the price cap that the wealthy G7 democracies and Australia will impose are still being worked out.
According to Yellen, the cap would give India, China, and other significant consumers of Russian crude the power to negotiate a lower price from Moscow. Russian crude "is going to be selling for a discount, and we're happy for China, Africa, or India to get that discount. That's okay, "Yellen continued.
India and private Indian oil companies, according to Yellen to Reuters "can also buy oil at any price they choose, provided they find alternative services and avoid using these Western ones. Any way is acceptable."
The cap denies insurance, maritime services, and financing provided by the Western allies for tanker cargoes priced above a fixed dollar per barrel cap in order to reduce Russia's oil revenues while keeping Russian crude on the market. An upper limit could be the historical average price of Russian Urals crude of $63-64 per barrel.
Since the EU first unveiled plans for an embargo on Russian oil to punish Moscow for its invasion of Ukraine in May, the United States has been promoting the idea.
After India's foreign minister stated last week that his nation would keep purchasing Russian crude because it benefits India, Yellen made this statement. However, other officials have stated they are leery of the unproven price cap mechanism. The finance and energy ministries of India were unavailable for comment on Yellen's remarks.
"I do not think we will follow the price cap mechanism, and we have communicated that to the countries. We believe most countries are comfortable with it and it is in no one's case that Russian oil should go offline," one Indian government official told Reuters, speaking on condition of anonymity.
The official continued, "Stable prices and supplies are most crucial."
In order to prevent its customers from having to find tankers, insurance, or other services as the price cap, Rosneft, the largest oil exporter from Russia, is growing its tanker charter business.
Even with Russian and Chinese tankers, as well as a "shadow" fleet of older, decommissioned tankers and re-flagged ships, Yellen claimed that it would be "very difficult for them to sell all the oil that they have been selling without a reasonable price."