India is gearing up to buy even more Russian oil if the Kremlin carries out its threat to halt sales to countries that adhere to a proposed price cap on Urals crude.

The formal start of the price-capping embargo, in line with proposals by the G7 group of most advanced economies, along with Australia, is set for 5 December.

India, the world’s third-largest hydrocarbons consumer, sent a clear message during a visit of a large delegation to Moscow this week, led by the Minister for External Affairs, Subrahmanyam Jaishankar.

He told a press conference: “Russia has been a steady and time-tested partner. Any objective evaluation of our relationship over many decades would confirm that it has actually served both our countries very well. If it works to my advantage, I would like to keep that going.

“It is our fundamental obligation to ensure that the Indian consumer [lacking a high income] has the best possible access to international markets on the most advantageous terms.”

Jaishankar said his country will examine the mechanism once the oil price cap is formally approved before deciding on its response.

Since the Russian invasion of Ukraine in February, India has become a major buyer of Russian seaborne oil cargoes that are loaded at Novorossiysk, Primorsk, Ust-Luga and Murmansk.

Those cargoes have been sold at large discounts against benchmark Brent to take account of sanctions and to pay for higher transportation and transshipment costs and longer waiting times against traditional oil supplies from Middle East suppliers to India, such as Iraq.

These discounts are understood to have been wide enough to allow Russian oil to displace India’s traditional Middle East suppliers.

Russia top supplier

As a result, the Russian share of India’s oil imports jumped to 22% in October — estimated at 946,000 barrels per day — compared with 20.5% from Iraq and 16% from Saudi Arabia, The Economic Times has reported.

The Russian share stood at just 0.2% before the invasion, the Indian Minister of Petroleum & Natural Gas, Hardeep Singh Puri, said in an interview with US broadcaster CNN.

In October, US Treasury Secretary Janet Yellen said a price cap in the $60-a-barrel range would probably be sufficient to reduce Moscow’s energy revenues while allowing profitable production for its oil producers.

The cap is likely to be a fixed price at the first point of sale on land and is likely to be periodically revised and not be linked to any oil price index, from what can be gleaned from discussions ahead of its implementation.

However, speaking to CNN, Puri expressed strong concern that global oil prices might hit $200 per barrel in the event that Russian seaborne supply is removed from the market or India stops buying its export barrels.

“We have [a] moral duty to our consumers. We have 1.3 billion [people] in the population, and we are to ensure they are supplied with energy. There is no moral conflict in buying Russian oil. Somebody wants to take an ideological position but we buy whatever is available” on the market, he said.

Puri also hinted that India will consider seeking an exemption from the price cap scheme.

He pointed out that Hungary and China can receive Russian oil by pipeline, and “Japan can buy it” without any restrictions that are put on other countries by international sanctions.

“I would like to find out whom the price cap is aimed at … We feel no pressure from Western governments” to participate in the initiative, Puri added.

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