The US says India can buy as much Russian oil as it wants outside the G7 price cap as India is one of Russia's largest oil customers.

The United States Treasury Secretary Janet Yellen stated that India could continue buying as much Russian oil as it wants, including at prices above a G7-imposed price cap mechanism, if it steers Western insurance, finance, and maritime services clearly bound by the cap. She mentioned that Russia finds it difficult to continue shipping as much oil as they have when the EU stops buying Russian oil. This will lead them heavily to search for buyers, and many buyers rely on Western services.

Currently, India is Russia’s largest oil customer. Final price cap information about the price cap to be imposed by G7 democracies and Australia is still coming together ahead of December 5th. Yellen highlighted that the existence of the cap would give India and other major buyers of Russian crude oil leverage to reduce the price they pay to Moscow. Russian oil will sell at bargain prices, and the US is happy to have India get that bargain.

Furthermore, Yellen asserted that India and private Indian oil companies could purchase oil at any price they wanted as long as they did not use these Western services and found other services.

The cap is intended to reduce Russia’s oil revenues while keeping Russian crude on the market by denying insurance, maritime services, and finance offered by Western partners for tanker cargoes priced above a fixed dollar-per-barrel cap. A historical Russian Urals crude average of 63 to 64 USD a barrel could form an upper limit. The United States has promoted the cap concept since the EU first laid out plans for an embargo on Russian oil.

Yellen’s remarks were made after India’s foreign minister opined that India would continue to buy Russian crude as it benefits the country. India’s finance and energy ministries were not present to comment on Yellen’s remarks, but other officials stated they were wary of the unproven price cap method.

Speaking on the condition of anonymity, an Indian government official stated that India would not follow the price cap mechanism, and India has communicated that to the other countries. India believes most countries are comfortable with it, and it is no one’s case that Russian oil should go offline. The official also added that stable supplies and prices are most important.

Russia’s largest oil exporter is expanding its tanker charter business to avoid its buyers having to find tankers, insurance, or other services as the price cap. Yellen noted that even with Russian tankers, decommissioned tankers, and re-flagged vessels, she believes that they will find it difficult to sell all the oil they have been selling without a reasonable price.