India is buying Russian oil below the price cap

The United States will continue to discuss India’s purchases of Russian oil with the Indian government but is satisfied so far that New Delhi is buying the crude well below a western price cap.

India’s purchases of Russian oil are a constant topic of discussion between the US and India as the Biden administration seeks to deny Russia the revenue it needs to fund its invasion of Ukraine, senior State Department officials of India said. They briefed reporters on condition of anonymity.

It’s good both for the Indian economy and for stabilizing oil markets that India is buying crude at deep discounts from the cap, the officials said.

They spoke as Secretary of State Antony Blinken arrived in New Delhi for a meeting of Group of 20 foreign ministers. Blinken will try to rally his counterparts to condemn Russia’s aggression in Ukraine and highlight the impact the war has had on world food and energy prices.

India has close historic defense and diplomatic ties with Russia and has largely held off condemning Russia’s war at the United Nations (UN), even as some senior officials have criticized the invasion and its impact on developing countries.

Over the past months, import-dependent India has seized the opportunity presented by discounted crude. A little over a year ago, it bought almost no Russian oil; today, the South Asian market has become crucial for Moscow, which in turn has displaced other suppliers. That is unlikely to change even as China reopens after lengthy pandemic lockdowns.

However, New Delhi's ability to benefit from lower prices now faces the challenge of tightening enforcement. Refinery and banking executives reported that the need to prove imports comply with a $60-a-barrel cap imposed by the Group of Seven (G7) nations now requires additional steps and verification that may weigh on purchases.

The US expects an overwhelming majority of G-20 countries to continue standing against Russia’s war, with Russia and China remaining as isolated outliers, the officials said, adding that they expect to see language in a final statement that reflects that position.

The US, which has alleged that China is considering offering weapons or other lethal aid to Russia, also plans to raise that issue on the margins of the G-20, including with countries other than the close allies and partners it has already briefed about the matter, the officials said.