According to sources cited by Bloomberg, India has decided not to violate Western sanctions imposed on Russia, thereby complying with the oil price cap.
Indian officials reportedly discussed the issue of anti-Russian sanctions with their colleagues from the G7 countries on the sidelines of the ministerial G20 meeting in early March.
The parties were satisfied with the results of the negotiations. As a result, India has decided not to violate the $60 price cap on Russian oil.
India has become one of Russia’s key oil markets amid the European embargo. However, local refineries purchase raw materials at a price below the cap level of $60 per barrel.
This policy allows Indian refineries to access Western insurance and transportation services.
In February, Indian state-run company Hindustan Petroleum faced problems when paying for purchased Russian oil due to Western sanctions that came into force on December 5, 2022.
Many banks refused to make payments to avoid falling under secondary sanctions. Hindustan Petroleum started looking for reliable alternative banking channels.
It is worth noting that oil deals between Russia and India have threatened the dominance of the US dollar, which has been used as a universal means of payment in international oil trade for decades.
Most transactions between India and Russia are concluded in non-dollar currencies, including the dirham and the ruble.