September 12, 2022

Business Standard learned about Russia’s request to India for an oil price ceiling

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Business Standard: Russia offered India a discount for waiving oil price caps The G7 countries proposed to introduce a ceiling on Russian oil prices. The United States discussed this initiative with India, which stated that it would study it carefully “(max-width: 320px) and (-webkit-min-device-pixel-ratio: 2), (max-width: 320px) and (min-resolution: 192dpi)” >

Russia has offered India to supply oil at lower prices on the condition that New Delhi refuses to support the initiative of the G7 countries to set marginal prices for oil, writes the Indian newspaper Business Standard, citing unnamed officials and the Indian Foreign Ministry .

According to the sources of the publication, it is assumed that “substantial discounts” for oil from Russia will be more than those offered by Iraq in the last two months.

“In exchange, they are asking that India not support the G7 proposal. A decision on this issue will be made later, as negotiations progress with all partners,— Indian Foreign Ministry spokesman told the publication.

In May, Russian crude oil for India was $16 a barrel cheaper than the average price of a $110 import basket, the newspaper writes. In June, the discount fell to $14 per barrel, and as of August it was $6 of the average price of imported oil, the publication points out.

Iraq, one of the largest suppliers of oil to India, since the end of June began to “undermine” position of Russia, supplying several grades of crude oil, the average price per barrel of which is $ 9 lower than the Russian one, the newspaper writes. As a result, Russia, with a share of 18.2%, fell to third place in the list of countries in terms of oil supplies to India. The first place is now occupied by Saudi Arabia (20.8%), the second & mdash; Iraq (20.6%), the newspaper points out. In June, Reuters wrote, citing sources, that Russia overtook Saudi Arabia in terms of supplies in May, and Iraq became the leader.

In early September, the “Big Seven” (G7: US, Canada, Japan, UK, France, Germany and Italy) agreed to impose a price ceiling on Russian oil. The countries said in a joint statement that such a measure is designed to reduce Russia's income and its ability to finance military operations in Ukraine, as well as to reduce their impact on rising global energy prices.

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Price caps have not yet been set, but they are planned to be determined by the start of the EU embargo on Russian oil, which should come into force in December. Those countries that agree to introduce it will be able to join the discussion of the price ceiling, the US Treasury said. In addition, the preliminary guidance of the American department stated that those who purchase Russian oil at prices above the marginal prices could be subject to penalties and penalties from the United States.

In mid-July, US Treasury Secretary Janet Yellen reported that Washington and New Delhi had “encouraging” negotiations on the upper limit of prices for Russian oil. A Reuters source in the US department indicated that the Indian country had not expressed “hostility to the idea.” In early September, Indian Oil and Gas Minister Hardeep Singh Puri said that the country would carefully consider the G7 proposal on price caps.

Russia will not supply oil and oil products to companies and countries that impose price caps, the Deputy Prime Minister said Alexander Novak. He called the initiative of Western countries “complete absurdity”; and interference with market mechanisms that could lead to “destabilization of the oil industry.”

President Vladimir Putin has also said that Russia will stop supplying energy to countries that make political decisions that contradict the terms of the contracts. “There are contractual obligations. Will any decisions of a political nature be made that contradict the contracts? Yes, we simply will not fulfill them,»,— said the president.

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