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Is India’s mad buying of Russian oil in line with the interests of the West? U.S. official: price cap mechanism in place Provider FX678

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Is India’s mad buying of Russian oil in line with the interests of the West? U.S. official: price cap mechanism in place Provider FX678
Is India’s mad buying of Russian oil in line with the interests of the West?U.S. official: price cap mechanism in place

Since the outbreak of the Russia-Ukraine conflict, due to the sanctions imposed by the West on Russian oil, India has been taking the opportunity to purchase a large amount of low-priced Russian oil, while Western countries led by the United States have adopted a tacit attitude towards this. Analysts pointed out that this is because it is in the interest of Western countries that India buys large quantities of cheap Russian crude oil.

The Group of Seven (G7), the European Union and Australia have implemented a price ceiling of US$60 per barrel for Russian crude oil since December 5 last year. Western companies will only provide oil for ships carrying Russian crude oil if it is below the ceiling. services such as insurance and finance.

In addition, the European Union has officially banned the import of Russian seaborne crude oil since December 5 last year. However, shortly after the escalation of the conflict between Russia and Ukraine, European buyers have already avoided Russian crude oil.

U.S. official: “Russian oil price cap mechanism in place”

The west is not bright, the east is bright. After losing Europe, the main export market, Russia began to export cheap crude oil to India and other Asian countries. As the third largest crude oil importer in the world, India relies on imports for up to 85% of its crude oil.

While the West has imposed a $60/barrel price ceiling on Russian crude, the export price of Russia’s flagship crude is significantly below that ceiling.

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For Western countries, India’s large purchase of Russian crude oil is in line with their original intention of sanctioning Russian oil, which is to prevent Russian oil from completely withdrawing from the international market while limiting Russia’s energy revenue, thereby causing an impact on oil supply.

“U.S. Treasury officials have two main goals: keep the market well supplied and deprive Russia of oil revenue,” said Ben Cahill, a senior fellow at the Center for Strategic and International Studies. Export products at market prices and get higher profit margins. They’re okay with that.”

A spokesman for the US National Security Council said a price cap on Russian oil was in place that countries such as India could use to keep energy markets stable while Russia’s energy revenues were capped.

India to export refined petroleum products to Europe

From the 5th of this month, the European Union will officially ban the import of refined oil products shipped by sea from Russia. Western price caps on Russian oil products also came into effect on the same day.

There are two types of price limit this time, one is refined oil products whose price is higher than that of crude oil, such as diesel, and its price ceiling will be set at US$100/barrel. The other, for products such as fuel oil and certain types of naphtha that are cheaper than crude oil, would have a price cap of $45 a barrel.

With the introduction of new Russian oil price cap measures, India’s position in the global oil market is also becoming more and more important. Warren Patterson, commodities analyst at ING, noted that India is a net exporter of petroleum refined products, most of which will go to the West to help ease the current tension. In the raw materials used in India, the proportion of Russian crude oil is growing.

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Under EU rules, when Russian crude is processed into fuel in countries outside the bloc such as India, the refined products can be shipped to the bloc as they are not considered to have come from Russia.

Serena Huang, chief Asia analyst at energy analytics firm Vortexa, said the G7 wanted to cut Russia’s revenue as much as possible, but it was also in their interest to ensure continued supply of Russian crude and refined products to avoid a global supply crunch.

This article is forwarded by “Huitong Finance” authorized by the Financial Association

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