The G7 countries are seeking India’s support to enforce a price cap on Russian oil. But Moscow seems to be a step ahead.
Russia is now willing to provide petroleum to India at even lower rates than before, The Business Standard reported today.
“In principle, the ask in return is that India should not support the G7 proposal. A decision on this issue will be taken later following talks with all the partners,” the newspaper quoted a foreign ministry official as saying.
Canada, France, Germany, Italy, Japan, the UK, and the US constitute the G7. They are looking to choke Russia’s crude oil revenue streams used to fund the Ukraine war.
In June, Russia became India’s second-largest crude oil supplier after Iraq. India depends on imports to meet 85% of its petroleum needs.
Russia’s share in India’s oil imports bucket rose from a mere 1% in February—before the Ukraine war—to 18% by June 2022. India snapped up Russian oil as many countries stopped trading with that country and its oil prices fell.
Russia’s discount bonanza for India
In May, supplies from Russia were priced at $16 cheaper than the average Indian imported crude oil barrel of $110. In all, Russia has so far reduced $30 on every barrel of oil it sells to India.
This eventually compelled Iraq to cut its rate to $9 lower than a Russian oil barrel. Yet, in August, Russian crude oil cost $6 less than India’s average barrel of imported crude oil, Business Standard reported.
In any case, India has long felt the need for an alternative crude oil supply source to west Asia.
G7's push to impose a price cap
The G7 has proposed two price caps on Russian oil, one each for crude and refined petroleum products. While the one on crude comes into effect on Dec. 05, 2022, the other goes live on Feb. 05, 2023, when the European Union bans Russian oil products.
India has said it will consider all aspects before taking a decision on it.