“If it is refined in a country and then sent forward, from a sanctions perspective that is an import from the country of purchase, it is not an import of Russia.”
Morris and her colleague Eric Van Nostrand, assistant secretary for economic policy, were speaking at a discussion organised by the Ananta Aspen Centre, a Delhi-based non-profit organisation.
In December 2022, the G7 countries imposed a price cap on purchases of Russian oil in response to Moscow’s “special operation” in Ukraine that began in February that year.
India, which was the top buyer of Russian oil in 2023, has been heavily criticised for its continued purchase of discounted oil from Moscow. Ukrainian foreign minister Dymtro Kuleba in 2022 had said that India’s purchases of discounted Russian oil were paid for by “Ukrainian blood.”
However, as the war has carried on, even Kyiv has come to accept India’s purchase of Russian oil, with Kuleba recently visiting New Delhi and meeting with his Indian counterpart S. Jaishankar.
At the start of the discussion, Nostrand contended that the oil price cap introduced by the G7 countries in fact benefitted emerging economies like India.
“The price cap is designed to foster a market in which Russia supplies energy but at a heavily discounted price – maintaining the volume of energy supplied to global markets while minimising [Vladimir] Putin’s profits earned from it,” he said.
On her part, Morris said that the US has not asked India to reduce its purchase of Russian oil. She also made it clear that no Indian entity has been sanctioned for the purchase and refining of Russian crude oil.
The G7 price cap
In June 2022, Canada, France, Germany, Italy, Japan, the UK, the US and the European Union (EU) at the G7 leaders’ summit in Elmau, Germany considered the usage of import price caps on Russian oil as a measure to hurt Moscow’s energy revenues.
That year in September, the G7 countries agreed to introduce a price cap on Russian oil, which was capped at $60 a barrel and implemented in December.
The effects of the price cap saw India increase its purchases of Russian oil through 2023. New Delhi was the top buyer of Russian oil in 2023. It was able to negotiate with Moscow and purchase oil at prices lesser than the G7 cap.
External affairs minister Jaishankar in November 2023 asserted that New Delhi’s purchase of oil from Moscow helped soften global inflation.
“Just imagine for the moment had we not bought oil from Russia, global oil prices would have gone higher; because we would have gone into the same market, to the same suppliers that Europe would have done and frankly, as we discovered, Europe would have outpriced us,” Jaishankar is quoted as saying then.
“So, we’ve actually softened the oil markets and the gas markets through our purchase policies. We have, as a consequence, actually managed global inflation. So frankly, we should be thanked. I’m waiting for the thank you,” he had said.
(Edited by Tony Rai)
