By Stephanie Kelly
NEW YORK (Reuters) -The United States is starting to see success with discussions of a Russian oil price cap by the Group of Seven (G7), as Washington has heard countries are negotiating deals with Russia to buy oil far below the benchmark Brent crude price, a top U.S. Treasury official said Wednesday.
U.S. Deputy Treasury Secretary Wally Adeyemo said Russia is trying to lock in contracts ahead of a Dec. 5 European Union ban on seaborne shipments of Russian oil. He did not cite a specific dollar-per-barrel figure on where Russian crude is being sold, though that oil already sells at a discount to benchmarks.
The United States and other G7 countries are developing a price cap on Russian seaborne oil deliveries to cut Russia's oil revenues, while encouraging Moscow to continue to produce oil.
Russian oil already trades at a discount to benchmark Brent crude, though that spread has fluctuated wildly since Russia invaded Ukraine in February. Urals crude recently traded around $75 a barrel, or a $17 discount to Brent futures; the discount has at times risen to more than $30 a barrel.
Governments and companies restricted purchases of Russian oil after Moscow invaded Ukraine on Feb. 24. The price cap on Russian oil was agreed in principle last month by the G7 rich countries.
The United States will look at historical data for what Russia has earned in the past for their oil to set the price cap, Adeyemo said. He added that the cap will be above the price of production for Russia to encourage it to continue supplying oil to the global market.
Russia has said it would not supply oil to any country that agrees to the price cap. Two of Russia's largest buyers, China and India, have stepped up purchases of the country's oil, taking advantage of the gap between that and other crude grades.
Brent crude futures traded above $92 per barrel on Wednesday.