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India is buying Russian crude oil at a deep discount to a price cap set by the G7 and the European Union, State Department officials told U.S. media this week.
The topic of Russian oil imports is under constant discussion between Washington and New Delhi, the officials said, according to Bloomberg, but for now the former is happy that the latter is buying Russian crude at below $60 per barrel.
Russia became India’s largest single supplier of crude oil last year as the Western sanction barrage against Moscow prompted the latter to find new markets. Ever since the G7 and the EU decided to try and squeeze Russian oil exports in a bid to reduce revenues India and China have become the biggest buyers of discounted Russian crude.
The two heavily import-dependent countries aren't abiding by the G7 price cap—they seek opportunistic purchases of cheap crude. The West believes that the price cap is benefiting the two large Asian oil importers with bargaining power to negotiate steep discounts from Russia, with traders covering shipping costs.
The U.S. and the EU consider the increased leverage of China and India in driving a hard bargain for Russian oil as a success of the price cap policy.
However, recent research has suggested that Russia is actually selling its crude at prices above the cap set by the G7 and the EU. Bloomberg reported last month that in the first month after the embargo, Russian oil sold abroad for an average of $74 per barrel, according to calculations made by academics from the Institute of International Finance, Columbia University, and the University of California.
India’s imports of Russian crude hit a record in January, at 1.4 million bpd, only to break it next month, when imports rose to 1.85 million bpd, according to tanker tracking data.
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.