The United States has invited India to join the Russia Oil Price Cap coalition, a proposed crude buyer’s cartel, during Deputy Secretary of Treasury Wally Adeyemo’s meeting with Indian government officials.
Speaking to journalists shortly after his meeting with Finance Minister Nirmala Sitharaman on Friday, Adeyemo said that the price cap coalition is being constituted to lower the Russian earnings from the sale of crude oil.
He also said that India has ‘shown great interest’ in the proposal since this aligns with the objective of keep energy price lower for domestic consumers.
“If India is part of the coalition, it can have a say in deciding the price cap,” he said.
Under the sixth set of sanctions adopted by European Union (EU), a complete import ban on all Russian seaborne crude oil and petroleum products has been proposed from December 5. This package also prohibits EU operators from insuring and financing the transport, in particular through maritime routes, of Russian oil to other countries.
“The key thing to remember is that the price cap is going to be an exception to the European sixth package,” Adeyemo told ET.
According to Adeyemo, the price cap will allow countries to use European services if they are buying Russian crude below the fixed price.
This approach will reduce the gains that Russia makes from sale of crude oil but the price cap will be above the production cost to ensure that supplies are not disrupted.
“This is an exception applicable to Russian crude oil because without it the countries won’t be able to use European services to bring Russian crude by sea,” he said adding that in Europe comprises broadly up to 90% of the global Protection and Indemnity (P&I) market.
The P&I liability insurance is essential for most maritime liability risks associated with the operation of a vessel. It is a necessity for transport of high value commodities like crude oil.
Responding to questions on whether he had discussions with Indian government authorities on inflation, Adeyemo said that the focus of discussions was on keeping energy prices in check to bring down costs. He also said that there were talks on supply chains resiliency, climate change and clean tech, and importance of global food security.