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The U.S. is hoping to tempt China and India to join the G7’s price cap plan for Russian oil by dangling the prospect of even bigger discounts for crude cargoes.
"Our hope is that countries like China and India will join the price cap coalition, or take advantage of the price cap coalition, to lower the amount of money that Russia makes from oil exports," U.S. Deputy Treasury Secretary Wall Adeyemo has told a conference in New York, Reuters reports.
Adeyemo’s remarks come as the G7 grapples with the fate of a price cap on Russian oil that many feel will not be effective without a broader coalition of countries behind it, particularly China and India.
Making this work would mean those countries on board with the price cap would be required to block all shipping-related services for Russian seaborne crude, including insurance and finance, in cases where the price cap is not being honored and oil is being sold above that price ceiling.
The G7 agreed last Friday to finalize and implement a price cap on Russian oil by December 5th, which would be kept in force for three months in an effort to reduce oil revenues for the Kremlin’s war chest.
The group is attempting to maintain a balance by implementing a price cap that is above the cost of production for Russia–a move they felt would keep Russian oil on the global market.
Moscow, however, has said numerous times before and since the G7’s Friday announcement that it would simply deprive the West of oil outright and divert all cargoes to Asia, where China and India are already the biggest buyers of Russian crude since the invasion of Ukraine.
On Monday, China explicitly voiced its opposition to a G7-imposed price cap on Russian oil, while India has agreed to examine the price cap plan, but remains adamant that it has no moral duty to comply.
By Michael Kern for Oilprice.com
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Michael Kern is a newswriter and editor at Safehaven.com and Oilprice.com,