BRUSSELS: The Group of Seven nations (G7) is looking at a price cap on Russian sea-borne oil in the range of $65-70 per barrel, a European Union diplomat said on Wednesday.

Ambassadors from 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, including the United States, as well as the whole of the European Union and Australia, are slated to implement the price cap on sea-borne exports of Russian oil on Dec. 5, as part of sanctions intended to punish Moscow for its invasion of Ukraine.

“The G7 apparently is looking at a $65-70 per barrel bandwidth,” the diplomat said.

The idea of the price cap is to prohibit shipping, insurance and re-insurance companies from handling cargos of Russian crude unless it is sold for no more than the maximum price set by the G7 and its allies.

India can buy as much Russian oil as it wants: US

Because the world’s key shipping and insurance firms dealing with trade in crude oil are based in G7 countries, such a price cap would make it very difficult for Moscow to sell its oil for a higher price. The vast majority of its oil is carried by tankers rather than through pipelines.

At the same time, because production costs are estimated at around $20 per barrel, the price cap would still make it profitable for Russia to sell the oil, while preventing a supply shortage on the global market.

Brent crude front-month future oil prices initially fell to $86.54 from $87.30 on the news.