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The crude oil export ban for countries implementing the G7 price cap that Russia announced this week could stimulate more exports to India, the Economic Times has reported, citing Indian industry executives.
Earlier this week, President Vladimir Putin said Russia will stop selling crude to any buyer that includes a price cap clause in the contract. The decree will become effective on February 1 and will also cover oil products. Putin, however, added exceptions could be made in special cases.
Russia’s response to the price cap was described as a reaction to "actions that are unfriendly and contradictory to international law by the United States and foreign states and international organisations joining them".
The G7 earlier this year agreed to impose a price cap on Russian oil exports in a bid to stifle Moscow’s oil revenues without hurting the global supply of oil. China and India were instrumental in the success of the cap since the U.S. and the UK both already had bans on Russian oil and fuel imports.
The EU joined earlier this month when it imposed an embargo on Russian crude oil imports by sea. Japan got an exemption from the cap because Russian oil supplies are vital for the country’s economy and hard to replace.
Instead of joining the cap, however, both China and India have indicated they would prefer to continue doing business with Russia, especially since they are currently taking advantage of the significant discount that Russian crude is selling at, after the European market basically disappeared from its list of clients.
With the cap, according to the Economic Times report, Russia may find itself with some surplus oil volumes and the most logical choice would be to offer them to India and China. Russia this year turned into one of India’s biggest oil suppliers.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.