Russian oil value cap will give consumers leverage: US official

A value cap that Group of Seven (G7) international locations need to impose on Russian oil will present consumers with leverage to get higher costs, a U.S. Treasury official mentioned on Wednesday.

America has held “optimistic dialogue” with China and India, two main importers of Russian crude, Ben Harris, assistant secretary for financial coverage on the U.S. Treasury, advised the Power Intelligence Discussion board in London.

The worth cap plan agreed by G7 rich nations requires collaborating international locations to disclaim insurance coverage, finance, brokering, navigation and different providers to grease cargoes priced above a yet-to-be-determined value cap on crude and oil merchandise.

The European Union is an oil value cap to match the one agreed by the G7, diplomats mentioned final month.

The worth cap, whose full particulars have but to be hammered out, will likely be calculated on a greenback per barrel foundation and will likely be set at a stage that can retain an incentive for corporations to supply, he added.

“The intention of the worth cap is to protect commerce of Russian oil however at decrease costs,” Harris mentioned.

“As a result of we need to present financial incentives for Russia to proceed to supply, we’re contemplating the upper value wells as a knowledge level.”

Though no value stage has been set, the goal of the cap is to widen the unfold between the benchmark Russian Urals crude grade and the worldwide Brent benchmark, Harris mentioned.

“We are able to have a really profitable value cap and not using a single barrel traded beneath the worth cap. If what we have completed is present leverage for these importers to get the very best low cost doable, we’re completely advantageous with that.”