India Can Continue Buying Russian Oil At Any Price As Long As…: US Treasury Secretary

Yellen was attending the ninth edition of the US-India Economic and Financial Partnership when she spoke about India's Russian oil imports and what Moscow is going to face in the near feature.

Union Minister for Finance and Corporate Affairs Nirmala Sitharaman and US Treasury Secretary Dr. Janet Yellen at the 9th meeting of India-US Economic Financial Partnership, in New Delhi on November 11, 2022. ( Image Source :PIB )

New Delhi: US Treasury Secretary Janet Yellen on Friday conveyed that the US has no objection to India procuring Russian oil at prices above a G7-imposed price cap mechanism till it avoids Western insurance, finance, and maritime services that are subject to the cap.

Yellen was attending the ninth edition of the US-India Economic and Financial Partnership. In an interview with the news agency Reuters, Yellen said "India can also purchase oil at any price they want as long as they don't use these Western services and they find other services. And either way is fine."

How does the cap affect Russian oil?

The concept of the cap was promoted by the US since the European Union first chalked out plans in May for an embargo on Russian oil to penalise Moscow for its operations in Ukraine.

It is typically aimed at capping 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. A historical Russian Urals crude average of $63-64 a barrel could form an upper limit.

The final details of the price cap to be imposed by wealthy G7 democracies and Australia are being worked out ahead of a December 5 deadline.

The cap would offer India, China and other major buyers of Russian crude oil leverage to reduce the price they pay to Moscow. Yellen says, "Russian oil is going to be selling at bargain prices and we're happy to have India get that bargain or Africa or China. It's fine."

India remains Russia's largest oil customer other than China.

"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… They're going to be heavily in search of buyers. And many buyers are reliant on Western services." the treasury secretary added, as quoted by Reuters.

However, she noted that the cap would still drive global oil prices lower while curbing Russia's revenues. Russia will not be able to sell as much oil as it does now once the European Union halts imports without resorting to the capped price or significant discounts from current prices, Yellen added.