According to Indian External Affairs Minister Subrahmanyam Jaishankar, the country’s capacity to support US efforts to put a global price cap on Russian crude is being hampered by limited oil supplies and relatively high prices.
Jaishankar openly stated that India will assess any move affecting global energy markets based on how it impacts India and other nations in the Global South during a press conference with US Secretary of State Antony Blinken. He continued by saying that emerging nations are becoming increasingly concerned about how their needs for energy security are being met, especially given how “very stressed” the energy markets are.
The EU intends to outlaw the import of Russian oil transported by water as well as the provision of insurance, trade finance, banking, brokering, navigation, and other maritime services for the transit of Russian petroleum to any destination by EU businesses as of December 5. On February 5, refined petroleum products will no longer be sold.
Due to the high concentration of these maritime service providers in the EU and G7 nations—for example, 90% of the world’s shipping insurance—Russia may be forced to restrict access to a sizable amount of its crude and processed goods.
The price cap is meant to give a carve out for EU and G7 maritime service providers to continue assisting with the seaborne transport of Russian oil as long as it is sold at or below the cap level because that could lead to an increase in global fuel prices.
Jaishankar, whose organisation is in charge of carrying out Indian foreign policy, responded that technical discussions between the US and India were in progress but that the price cap mechanism remained a G7 effort when asked whether India would formally join.
Countries in the Global South have had trouble competing for scarce energy, he added, not just because prices are rising but also because supplies are frequently scarce. “Countries have had tenders for which they don’t even get a reply from suppliers, so our concern right now is that energy markets already under stress must soften up.”
According to the US Treasury Department, the price cap mechanism does not require all nations that purchase Russian oil after December 5 to sign up for it in order to be effective.
Instead, those nations who decide against joining would still be able to bargain with Russia at a significant discount using the price cap as a powerful instrument. According to US officials, the price cap gives them more negotiating power and price transparency with Russia.
Implementing the oil price cap, according to Blinken on September 27, would “keep oil flowing on global markets while denying Russia additional income that it would use to pursue its assault against Ukraine.”
He added that the US is “working with global partners to reduce dependence on fossil fuels and accelerate the transition to renewables.”
Blinken acknowledged that there would be difficulties in the months to come, but added that there was also a “significant opportunity… to finally end Europe’s dependence on Russian energy and, consequently, the position that Europe is in as being on the receiving end of Russia’s weaponization of energy, as well as to accelerate the transition to renewables and to ensure that we’re addressing the climate challenge that we face.”