The United States has held “positive dialogue” with China and India, two major importers of Russian crude, Ben Harris, assistant secretary for economic policy at the U.S. Treasury, told the Energy Intelligence Forum in London.
The price cap plan agreed by G7 wealthy nations calls for participating countries to deny insurance, finance, brokering, navigation and other services to oil cargoes priced above a yet-to-be-determined price cap on crude and oil products.
The European Union is looking at an oil price cap to match the one agreed by the G7, diplomats said last month.
The price cap, whose full details have yet to be hammered out, will be calculated on a dollar per barrel basis and will be set at a level that will retain an incentive for companies to produce, he added.
“The intention of the price cap is to preserve trade of Russian oil but at lower prices,” Harris said.
“Because we want to provide economic incentives for Russia to continue to produce, we’re considering the higher cost wells as a data point.”
Although no price level has been set, the aim of the cap is to widen the spread between the benchmark Russian Urals crude grade and the international Brent benchmark, Harris said.
“We can have a very successful price cap without a single barrel traded under the price cap. If what we’ve done is provide leverage for those importers to get the best discount possible, we’re perfectly fine with that.”