The United States is happy that India continues to buy as much Russian oil as it wants, including at prices above a price cap mechanism imposed by the G7; if it avoids insurance, finance and Western maritime services bound by the cap, the US Treasury Secretary Janet Yellen said Friday.
The cap would still lower global oil prices while limiting Russian revenue, Yellen said in an interview with Reuters on the sidelines of a conference on deepening U.S.-India economic relations. Russia will not be able to sell as much oil as it currently does once the European Union stops imports without resorting to the price cap or deep discounts from current prices, Yellen added.
“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.”
India is now Russia’s largest oil customer other than China.
The existence of the cap would give India, China and other major buyers of Russian crude leverage to lower the price they pay Moscow, Yellen said. Russian oil “will sell at favourable prices, and we are happy that India gets this windfall or Africa or China. That’s good,” Yellen added.
Yellen told Reuters that India and Indian private oil companies “can also buy oil at any price as long as they don’t use these Western services and find other services. And either way is fine.”
The cap aims to reduce Russia’s oil revenues while keeping Russian crude on the market by denying insurance, shipping services and financing Western allies provide for tanker shipments priced above a fixed dollar cap. per barrel. A historical average for Russian Urals crude of $63-$64 a barrel could be an upper bound.
The cap is a concept promoted by the United States since the EU first presented a plan in May to Russian embargo oil to punish Moscow for its invasion of Ukraine.