Yellen says India can buy Russian oil without price cap

New Delhi: US Treasury Secretary Janet Yellen stated on Friday that the United States is content for India to continue purchasing as much Russian oil as it desires, including at prices above a G7-imposed price cap mechanism, so long as India avoids Western insurance, finance, and maritime services bound by the price cap.

Yellen said in an interview with Reuters on the sidelines of a conference on strengthening US-Indian economic cooperation that the cap will continue to lower global oil prices while reducing Russia’s earnings. Yellen said that once the European Union ceases imports, Russia will only be able to sell as much oil as it does now, resorting to a price cap or considerable reductions from current levels.

“When the EU stops purchasing Russian oil, it will be very difficult for Russia to continue shipping as much oil as they have been,” Yellen added. “They will be aggressively seeking purchasers. And numerous buyers rely on Western services.”

India is now Russia’s largest non-Chinese oil buyer.

Before the December 5 deadline, the affluent G7 democracies and Australia are still working on the final specifics of the price ceiling that will be enforced.

Yellen stated that the cap’s establishment would give India, China, and other large consumers of Russian petroleum the power to negotiate a reduction in the price they pay to Moscow. Russian oil “will be sold at discounted prices, and we want India, Africa, and China to take advantage. It’s okay, “Yellen added.

Yellen told Reuters that India and private Indian oil businesses pose no threat to the United States “may also purchase oil at any price they choose, so long as they do not use Western services and find alternative services. And both are acceptable.”

The cap is designed to reduce Russia’s oil income while keeping Russian crude on the market by rejecting insurance, naval services, and financing from Western allies for tanker cargoes priced above a dollar-per-barrel ceiling. A historical average of $63-64 per barrel for Russian Urals crude might serve as a ceiling.

The United States had advocated for the cap since the EU first proposed an oil embargo against Russia in May to punish Moscow for its invasion of Ukraine.

Yellen’s comments followed India’s foreign minister’s statement last week that his country will continue to purchase Russian crude oil because it helps India.

India’s finance and energy ministries were unavailable for comment on Yellen’s comments, but other officials have expressed skepticism regarding the unproven price ceiling mechanism.

“I do not believe we will adhere to the price ceiling system, and we have told this to other nations. We feel the majority of countries are okay with it, and it is in no one’s interest for Russian oil production to cease “Under the condition of anonymity, an Indian government official told, Reuters.

The official noted that steady prices and supplies are crucial.

Rosneft, the largest oil exporter in Russia, is developing its tanker charter business to prevent its purchasers from having to locate ships, insurance, or other services as a price ceiling.

Even with Russian tankers, Chinese tankers, and a “shadow” fleet of older, decommissioned tankers and re-flagged boats, Yellen stated, “I believe it will be extremely difficult for them to sell all the oil they have been selling without an acceptable price.”