At a financial conference in New York, United States (US) Deputy Treasury Secretary Wally Adeyemo expressed hope that China and India would join the Group of Seven’s (G7) “price cap coalition” as a means to purchase cheaper oil from Russia.
Adeyemo visited India last month on behalf of US President Joe Biden to invite India to join the coalition. At the time, he said that India had “shown great interest” in the proposal, as it complies with the need to lower domestic prices. During his visit to New Delhi, he said, “If India is part of the coalition, it can have a say in deciding the price cap.”
Similarly, the European Union’s energy chief, Kadri Simson, said this week that China and India should join the G7 in introducing a cap on Russian oil. In an interview with CNBC, she said that the two countries “are willing to buy Russian oil products while excusing themselves that this is important for their security of supply.” She noted that the cap would also ensure that Russia is not receiving “excess revenues.”
Russian President Vladimir Putin says G7 oil price cap "would be an absolutely stupid decision"
— Javier Blas (@JavierBlas) September 7, 2022
"We will not supply anything at all if it is contrary to our interests, in this case economic [interests]," he said. "No gas, no oil, no coal, no fuel oil, nothing."#EnergyCrisis
Since the Western bloc imposed sanctions on Russia after the onset of the Ukraine war, India and China have increased their reliance on Russian oil and purchased it at discounted rates.
Last Friday, the finance ministers of the G7 agreed to “urgently” impose a price cap on seaborne Russian oil in a bid to reduce Russia’s “ability to fund” the Ukraine war while simultaneously stabilising global energy markets and minimising the “negative economic spillovers, especially on low and middle-income countries.” It is predicted to enter into force by December.
In response, former Russian President and deputy chairman of the Security Council Dmitry Medvedev threatened to shut gas supply to Europe completely.
a MUST watch - wondering if #India will be following the G7 price cap on #Russian #oil: India's Petroleum Minister said "We will buy oil from Russia, we will buy from wherever" // "I have a moral duty to my consumer"@_HadleyGamble @themmagraham pic.twitter.com/FisoWW21aR
— SilviaAmaro (@Silvia_Amaro) September 6, 2022
Against this tense backdrop, on Monday, Indian Petroleum Minister Hardeep Singh Puri said India would ‘carefully’ consider the price cap based on a “large number of factors.” One of these factors is whether India will be able to secure sufficient supply from Venezuela and Iran to meet domestic demand.
In an interview with CNBC, Puri said that India was not sure whether it would join the G7’s decision yet. Additionally, he clarified that Russian oil accounts for merely 0.2% of Indian oil imports, with Iraq, Saudi Arabia, Kuwait, and the United Arab Emirates being the country’s largest suppliers. He reiterated, “Europeans buy more in one afternoon than [India does] in a quarter.”
Further, he clarified that there is no ethical dilemma in purchasing oil from Russia, as the Indian government has a “moral duty” to its own citizens. He added, “Do I as a democratically elected government want a situation where the petrol pump runs dry? Look at what is happening in countries around India.”
"We have been very open & honest about our interest. I have a country with per capita income of $2000, these are not pple who can afford higher energy prices. It's my moral duty to ensure best deal",says EAM Jaishankar on India importing Russian crude oil. pic.twitter.com/REH3Fg1VkS
— Sidhant Sibal (@sidhant) August 16, 2022
Puri’s comments echoed similar observations made by External Affairs Minister S. Jaishankar last month, when he said India is simply looking for the “best deal” in light of Middle Eastern countries, which are traditional suppliers of oil to Asia, diverting their exports to Europe. India imported 950,000 barrels per day (bpd) from Russia in June, over 50 times the number in April.
However, India’s Russian oil imports dropped in July for the first time since March, while its imports of Saudi oil increased for the first time since February, with a 25.6% hike to 824,700 bpd. In July, it purchased 877,400 bpd from Russia, down 7.3% from June. Nevertheless, Russia remained its second-biggest oil supplier after Iraq. Overall, however, Middle Eastern oil imports fell below 1 million bpd for the first time in 10 months, with imports from Iraq down 9.3% from June.
While India has remained on the fence, China has outright rejected the possibility of joining the coalition. On Monday, Foreign Ministry spokesperson Mao Ning said that oil is a “global commodity” and necessary to ensure “global energy security.” To this end, she said, “We hope relevant countries will make constructive efforts to help ease the situation through dialogue and consultation, instead of doing the opposite.”