Oil prices inched up as reports surfaced that the U.S. and its allies will set a price cap on Russian crude.
An agreement to enforce a limit as high as $70 a barrel could be announced as soon as Wednesday, The Wall Street Journal reported citing unidentified people familiar with the talks. Officials have discussed setting the cap at around $60 a barrel and enforcing it from Dec. 5.
The plan is designed to crimp revenue from Russian exports after it invaded Ukraine earlier this year, while also preventing any shortages that would prompt a fresh spike in global prices. Russian crude already trades at a discount after Western nations agreed to wean themselves off it, forcing the oil into Asian markets.
Brent crude, the international benchmark, rose 1.3% to $89.50 a barrel. West Texas Intermediate, the U.S. standard, rose 1.2% to $81.89 a barrel.
Under the proposed price cap, the U.S., the European Union and Australia would ban maritime services for vessels that are shipping Russian crude unless it’s sold below the cap. It leverages the fact that the West controls most of the world’s insurance and financing for shipping. It has taken months to come to such an agreement as countries wrangled over the details.
More generally, oil prices have been coming down for months on concern that the global economy is cooling after a series of aggressive interest-rate hikes from the Federal Reserve and other central banks. The Organization of the Petroleum Exporting Countries has agreed to cut output quotas to prop prices up.
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