New Delhi: Assistant Secretary for Economic Policy of the United States Department of Treasury, Eric Van Nostrand on Thursday hailed its country’s decision to implement price cap on Russian oil after the latter invaded its neighbouring Ukraine and said that the decision made Russia sell oil at discounted rates to other countries, including India.
“We know that the Indian economy has much at stake in the Russian oil trade, and has much at stake from the global supply disruptions that the price cap is designed to avoid. The price cap’s goals are to limit Putin’s revenue and maintain global oil supply–essentially by creating a mechanism for India and other partners to access Russian oil at discounted prices,” he said, speaking at a session organised at the Ananta Centre office aimed at discussing phase two of the price cap on Russian oil.
“The price cap’s goals are to limit Putin’s revenue and maintain global oil supply–essentially by creating a mechanism for India and other partners to access Russian oil at discounted prices. The price cap’s first year was a successful one by those standards: global oil markets remained well-supplied while Russian oil traded at a significant discount to global oil,” he added.
The US official underscored that the US and the price cap coalition have constrained Russia’s options to sell oil to other countries.
“This past summer and fall, we saw Russia’s investments in new infrastructure to sell oil outside the price cap’s jurisdiction begin to bear fruit, and the discount on Russian oil narrowed. In response, the United States and the Price Cap Coalition have reinvigorated our enforcement efforts and focused on constraining Russia’s options to sell outside the price cap. Today, even the Kremlin has acknowledged that these efforts are forcing Russia to sell at bigger discounts to global consumers like India,” he said.
“Adoption and successful implementation of such a novel policy is an important diplomatic
achievement, reflecting the unity of the Coalition opposed to Putin’s war. Our engagement with
Indian partners–in the public and private sectors–was an essential part of the process given
India’s critical role in the global oil trade,” he added.
The United States, other G7 countries and the European Union announced a price cap of USD 60 a barrel on Russian oil in late 2022 in response to Moscow’s invasion of Ukraine in February of that year.
In October 2022, the US Treasury began imposing sanctions on tankers it suspected of carrying oil above the price cap, and has since designated about two dozen tankers. The cap bans Western companies from providing service such as insurance, transportation and financing for oil sold above the cap.
The price cap seeks to cut Russia’s ability to fund the war in Ukraine by reducing its oil revenues while also ensuring that global oil markets are well supplied. The West’s sanctions have shifted much of Russia’s oil trade from traditional customers in Europe to India and China, and have forced some shippers to turn to a so-called “shadow fleet” of ageing tankers, which the Treasury says cuts into Russia’s revenues.
(With inputs from ANI)
