The G7 countries are considering setting a ceiling price for Russian offshore oil in the range of $65-70 per barrel, a European Union diplomat told Reuters on Wednesday.

Ambassadors of the 27 EU countries are discussing the G7 proposal with the aim of reaching a common position by the end of the day.

The G7, which includes the United States as well as the European Union (as a legal entity) and Australia, intends to impose price caps on seaborne exports of Russian oil from December 5 as part of sanctions aimed at punishing Moscow for its incursion into Ukraine. .

“It looks like the G7 is looking at a range of $65-$70 per barrel,” the diplomat said.

The idea behind the price cap is to prevent shipping, insurance and reinsurance companies from handling cargoes of Russian crude unless it is sold at a price below the maximum price set by the G7 and its allies.

Since the world’s major transportation and insurance companies that trade in crude oil are located in the G7 countries, such a price cap would make it difficult for Moscow to sell its oil at a higher price.

The vast majority of its oil is transported by tankers, not pipelines.

At the same time, since the cost of production is estimated at about $20 per barrel, the price cap will make it still profitable for Russia to sell oil, preventing a supply shortage on the world market.

Brent crude futures for next month fell to $86.54 from $87.30 on the news.