“India can buy as much Russian oil as it wants” : 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 exceeding 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 cut world oil prices while reducing Russia’s revenues. Once the European Union stops importing, Russia won’t be able to export as much oil as it does now without using the cap price or big reductions from present levels, 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 buyer.

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.

The existence of the cap would give India, China and other major buyers of Russian crude leverage to push down the price they pay to Moscow, Yellen said. Russian oil “is going to be selling at bargain prices and we’re happy to have India get that bargain or Africa or China. its fine,” Yellen added.

Yellen told Reuters that India and private Indian oil companies “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.”

The cap denies insurance, maritime services, and financing offered by the Western allies for tanker cargoes priced over a predetermined dollar-per-barrel cap in order to reduce Russia’s oil income while keeping Russian crude on the market. An upper limit may be the historical average price of Russian Urals crude of $63-64 per barrel.

Since the EU initially 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.

Yellen’s comments followed last week’s declaration by India’s foreign minister that his nation would keep purchasing Russian crude because it helps India.

Yellen’s comments on India’s finance and energy ministries were not immediately available for comment, but other officials have stated they were leery of the unproven price limit mechanism.

“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 spoke to Reuters.

The official added, “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.

Yellen said that even with Russian tankers, Chinese tankers and a “shadow” fleet of older, mothballed tankers and re-flagged vessels, “I just think they will find it very difficult to sell all the oil that they have been selling without a reasonable price.”