US, allies to set Russia oil price cap in 'next few days'

Washington and its allies are planning to finalize a price cap for Russian oil in "the next few days," as they seek to cut off a critical source of funding for Moscow, the US Treasury Department said Tuesday, reports AFP.

The price cap would be the basis for a ban set to take effect on December 5 that will prohibit firms to transport or provide insurance for Russian oil shipments sold above the fixed price.

The Group of Seven wealthy nations, European Union, and Australia will impose the measure which aims to deprive Moscow of a key source of funds to pay for its war in Ukraine -- as well as helping to cool high global energy prices.

Russia's invasion of Ukraine early this year caused energy prices to soar, providing windfall profits that helped cushion the impact of Western sanctions on Moscow.

A senior US Treasury official told reporters Tuesday that the European Union is consulting with its members on the price level, and the broader coalition will take steps to implement the cap once the EU's process is complete.

"We expect the next few days for them to complete their consultations on price setting, and for us as a coalition to move forward ... implementing the price cap ahead of December 5," the official added.

The official said there was no reason to believe Moscow would retaliate against the new policy, as "it's not in their interest."

"Any action they take to drive up prices will have an impact on their new customers, customers like India and China," the official said.

Treasury officials have maintained that the price cap would allow Russia to earn a profit, but deny them excess revenues from inflated prices.

The Treasury Department issued guidelines Tuesday for shippers and financial firms involved in the transactions on requirements for abiding by the price cap.

The cap likely will be reviewed on a quarterly or semi-annual basis, due to the need to provide certainty to the marketplace, the official said.