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The U.S.-led initiative seeking to set a ceiling on the price of Russian oil sold on international markets will benefit China, U.S. Treasury Secretary Janet Yellen told media today on the sidelines of the G20 summit.
"We see the price cap is something that benefits China benefits India, and benefits all purchasers of Russian oil," Yellen said, as quoted by Reuters.
In her statement, the U.S. Treasury Secretary also said that China’s current buying of Russian crude was “completely consistent” with the West’s plans to keep Russian crude flowing into international markets.
Yet China, like India, has refused to join the price cap effort despite attempts by the U.S., and specifically Yellen, to get them on board with the argument that a price cap would make their imported Russian oil more affordable. Russia has said it would not sell oil to countries supporting the cap.
A few days before her statement on China, Yellen said she hoped India would take advantage of the price cap, again noting that it would make Russian oil cheaper for importers.
In a separate statement from earlier today, the U.S. Treasury Secretary said the U.S. had no problem with India not taking advantage of the cap but noted that this would mean Indian buyers of Russian crude would have to forego using Western insurance, financing, and shipping services, as those would be tied in the cap scheme.
Most analysts have pointed out China and India as crucial for the success of the price cap scheme because they are the biggest buyers of Russian oil. At the same time, the countries that devised the cap scheme – the G7 - all have already active or pending bans on Russian oil, meaning they will not be importing any Russian crude in a couple of months anyway, so the cap makes zero sense for them.
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.