Treasury Secretary Janet Yellen said Washington would be happy to see New Delhi continue to buy oil from Moscow at a price above a G7-imposed price ceiling set to take effect next month. The announcement came after India declared it would buy oil from Russia and ignore the price cap.
Yellen made the remarks in India on Friday. 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,” she said. Yellen believes the price cap will allow India, China and African countries to buy Russian oil at a discount.
Yellen provided further details to Reuters. 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." Yellen added, "[A]nd either way is fine.”
The price cap was designed by Yellen to cut Russia’s energy revenue without driving up prices. However, analysts believe oil could climb to over $300 per barrel if Moscow responds to the cap by curbing production.
It’s unclear how the price cap will function. The G7 has yet to announce what will be the highest price a country or company can import Russian oil without facing sanctions. The policy requires Russia to make agreements with shippers, insurers, private companies and governments to sell oil at below-market prices. The Kremlin says it will not export oil to any country or company that adopts the Western price cap.
Since Russia invaded Ukraine in February, the US and its partners have attempted to "cripple" Moscow’s economy. The economic war has largely backfired, with rising prices in the West leading to protests against sanctions on Russia. Meanwhile, the Kremlin has found partners in India, China, Turkey and Africa to replace the shrinking energy imports to Europe. In September, New Delhi imported 23% of its oil from Moscow, up from two percent before the war in Ukraine began.
Yellen’s comments come after New Delhi announced it has no plans to curb its Russian energy imports. On Tuesday, Indian Foreign Minister Subrahmanyam Jaishankar said, "As the world’s third-largest consumer of oil and gas, a consumer where the levels of income are not very high, it is our fundamental obligation to ensure that the Indian consumer has the best possible access on the most advantageous terms to international markets," he said, adding "we have seen that the India-Russia relationship has worked to advantage. If it works to my advantage, I would like to keep that going."