Russian Deputy Prime Minister Alexander Novak. Credit: The Russian Government

Russia has greeted India’s decision to ignore a price cap on Russian oil with an offer to help Russia build its own tanker fleet.

India announced last week that it would not comply with the $60 price cap on Russian seaborne oil imposed by G7 countries and their allies. This refuses Western insurance and leasing for tankers carrying oil sold for more than the price cap. As a result, Russia aims to lease and build large-capacity ships to negate the ban, allowing the country to continue business as usual.

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The offer was made during a meeting between Russian Deputy Prime Minister Alexander Novak and Indian Ambassador to Moscow Pavan Kapoor on Friday.

Novak said: “The introduction of a price cap on Russian oil is an anti-market measure. It disrupts supply chains and could significantly complicate the situation in global energy markets. Such non-market mechanisms disrupt the international trading system as a whole and set a dangerous precedent in the energy market. As a result, the problem of energy poverty is being aggravated not only in the developing world, but also in the developed countries of Europe.”

Russia previously threatened to stop supplying oil if the cap went into effect. According to Bloomberg News, Russia’s foreign minister, Sergei Lavrov, stated last week that the measure was immaterial, indicating that the government was perhaps softening its prior stance. The news agency reported that the $60 cap would keep Russian oil flowing, while limiting income to fund Russia’s war in Ukraine. 

Indian external affairs minister Subrahmanyam Jaishankar on 7 December, told the government that Indian refiners would continue to look for the best options in the country’s interest.

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“We do not ask our companies to buy Russian oil. We ask our companies to buy oil [based on] what is the best option that they can get. Now, it depends on what the market throws up. Please do understand it’s not just we buy oil from one country. We buy oil from multiple sources, but it is a sensible policy to go where we get the best deal in the interests of the Indian people, and that is exactly what we are trying to do,” Jaishankar said. 

Since the West enforced the cap, Russia has exported one tanker per day to India, amounting to around 1.6 million barrels per day. Oil trade between Russia and India rose by 50% between October and November.

In 2021, bilateral trade between Russia and India surged by 46.5%, surpassing $13.5 billion. Trade exceeded the previous year’s record of $20.4 billion from January to September 2022. Russian oil exports to India increased to 16.35 million tonnes in the first eight months of 2022.