SINGAPORE — The price cap G7 (Group of Seven) countries are planning to put on Russian oil to punish Moscow should be placed at a fair market value minus any risk premium resulting from its invasion of Ukraine, a US Treasury Department official told reporters on Friday.

The price should be set above the marginal production cost of Russia’s oil and take into consideration historical prices, the official said.

“There are several key data points we are considering and how the prices should ultimately be set and that includes the marginal cost of production for Russian oil,” said Elizabeth Rosenberg, Treasury Department assistant secretary for terrorist financing and financial crimes.

“The price cap price should be … in line or consistent with historical prices accepted by the Russian market.”

Ms. Rosenberg said that over the coming weeks the G7 will work together to determine the price cap and “bring forward the legal regimes in on jurisdictions that will give more specificity and clarity to exactly how this will be accomplished.”

The G7 wealthy nations last week agreed to impose a price cap, which calls for participating countries to deny insurance, finance, brokering and other services to oil cargoes priced above a yet to be set price cap on crude and two oil products.

US Treasury Secretary Janet Yellen and other Biden administration officials have been travelling to oil consuming countries to promote a mechanism that seeks to cut Russia’s oil export revenues, the lifeblood of its war machine, without reducing volumes of Russian shipments to global markets.

Russian President Vladimir Putin has said Russia would halt shipments to countries that impose the price cap. — Reuters