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India said that it would continue to purchase Russian crude oil even after the embargo and price cap go into effect on December 5, an official in the Indian Oil Ministry said on Friday.
India has consistently stated its intention to continue to purchase whatever crude oil makes the most financial sense for the import-heavy country. The Indian Oil Ministry official, cited by Attaqa, said that the sanctions placed on Russian oil—specifically on Western shipping and insurance services—won’t apply to India because they intend to use non-Western services to transport seaborne Russian crude oil into India.
With Poland finally on board, the EU agreed to cap the price of Russian crude oil at $60 per barrel—higher than the levels at which Russia’s Urals are currently trading. Russia has promised to stop shipments to any country employing the price cap. But the price cap only applies to countries hoping to use Western ships and Western insurers—which means it won’t apply to India.
The $60 per barrel G7 price cap and EU embargo on Russian crude oil will go into effect on Monday, December 5. An embargo on crude oil products will follow in February.
Analysts are mixed in their forecasts on how the crude oil price cap and embargo will affect the oil markets. With India and possibly China continuing to purchase Russian crude without the help of Western services, it will water down the effect of the sanctions. But industry insiders have also noted that there are a limited number of non-Western ships and insurers that can bring Russian oil to markets.
Last week, both China and India were purchasing crude oil from Russia at a massive $33.28 discount to Brent, meaning they are already purchasing well underneath the price cap.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.