India may continue to buy as much Russian oil as it wishes, even at rates higher than those fixed by the G7. In addition, it won’t be able to access the services of Western financial, insurance, or transportation firms, according to finance minister Janet Yellen.

In an interview with Reuters on the sidelines of a conference on strengthening U.S.-Indian trade cooperation, Janet Yellen predicted that the limitations would continue to depress global oil prices and reduce Russia’s income. After the European Union suspends imports, Yellen continued, Russia will only be able to sell as much oil as it does now by using price controls or considerable reductions from current prices.

“When the EU stops buying Russian oil, it will be complicated for Russia to continue to supply as much fat as they have been. They will be searching for clients actively. Many consumers also depend on Western services, according to Yellen.

Western officials finalizing plans for Russia oil-price cap

India is currently Russia’s second-largest oil customer after China.

The wealthy G7 democracies and Australia will implement a price ceiling starting December 5, although the specifics are still being worked out.

According to Yellen, the cap will allow India, China, and other significant consumers of Russian oil to negotiate a lower price with Moscow. We are pleased that India, Africa, and China have reached this agreement since Russian oil “would be sold at discount prices.” Everything is fine, said Yellen.

If they don’t use these Western services and locate alternative providers, Indian and private Indian oil businesses “can also acquire oil at whatever price they want,” according to Yellen. And that’s okay in any case.

By holding Russian oil above the market price and forbidding Western allies from providing insurance, maritime services, and financing for tanker cargoes priced beyond a predetermined ceiling, the restriction aims to reduce Russia’s oil income. The price range of $63-64 per barrel, which has historically been the average for Russian Urals crude, may serve as the upper bound.

Since the EU’s initial proposals for an embargo on Russian oil to punish Moscow for its invasion of Ukraine were announced in May, the United States has advocated for the cap.

India will not refuse to buy Russian oil

Yellen’s comments followed last week’s declaration by India’s foreign minister that his nation will continue to buy Russian oil because it helps India.

“I do not think we will follow the price cap mechanism, and we have communicated this to the countries. We believe that most countries are comfortable with this and in no case should Russian oil supplies be stopped,” – on condition of anonymity an Indian official told Reuters.

“Rosneft, Russia’s biggest oil exporter, is expanding its charter business, so buyers don’t have to find tankers, insurance, or other services.

Yellen said that even with Russian tankers, Chinese tankers, and a “shadow” fleet of older, decommissioned, and re-flagged tankers, “it would be challenging for them to sell all the oil they were selling without a reasonable price.” Western nations will succeed in influencing the aggressor country, which upsets the global balance through persistent and lengthy discussions.