China and India could take advantage of a Russian oil price cap and buy more cheap barrels, US Treasury official says

The proposal to cap the price of Russian crude would be a way for China and India to get cheap barrels, according to the deputy treasury secretary.

Adeyemo hoped that China and India would join the price cap coalition to lower the amount of money Russia makes from oil exports.

Financial service providers must help enforce the price cap as the Treasury Department seeks a simple compliance mechanism.

The cap to work would require participating countries to block insurance, finance, and other shipping related services for seaborne oil cargoes that are priced above it.

"In order for the price cap to be effective, we need service providers, especially those providing financial services, to help with implementation," Adeyemo told the clearing house and bank policy institute's conference.

Despite sanctions, Russia's oil exports have remained elevated as buyers like China and India have increased their imports.

The US-led price cap initiative, which G7 leaders have agreed to, is meant to limit Moscow's energy revenues. The move could cause Moscow to shut down oil production and cause crude prices to go up.

Russia will send more crude supplies to Asia if a price cap is imposed.

"Any actions to impose a price cap will lead to a deficit on the country's own markets and will increase price volatility," he said.