October 05, 2022 12:48 GMT
The G7 price cap on Russian oil will give buyers more leverage to get better prices according to US Treasury Official Ben Harris.
- The plan, agreed upon in principle last month but thin on details, is designed to keep Russian oil volumes flowing and avoid market tightness.
- The price of the cap – yet to be agreed - 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 according to Harris.
- "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." he added.
- "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." he said.