Oil prices fall more than 3% on Russian oil price cap talks

Contracts fell by as much as $3 per barrel after rising by more than $1 per barrel earlier in the session

Oil prices fell by more than $2 a barrel on Wednesday as the Group of Seven (G7) nations looked at a price cap on Russian oil above where the crude grade is currently trading.

Brent crude futures fell $2.82, or 3.19%, to $85.54 a barrel by 1450 GMT, while U.S. West Texas Intermediate (WTI) crude futures were down $2.62, or 3.24%, at $78.33 a barrel.

Both contracts fell by as much as $3 per barrel after rising by more than $1 a barrel earlier in the session, "following reports that the G7 price cap on Russian oil could be above the level it is trading at the moment", said Giovanni Staunovo, commodity analyst at UBS.

G7 nations are looking at a price cap on Russian seaborne oil in the range of $65-70/bbl, according to a European official on Wednesday.

Meanwhile, Urals crude delivered to northwest Europe is trading around $62-$63/bbl, although it is higher in the Mediterranean at around $67-$68/bbl, according to Refinitiv data.

Because production costs are estimated at around $20 per barrel, the cap would still make it profitable for Russia to sell its oil and in this way prevent a supply shortage on the global market.

A senior U.S. Treasury official said on Tuesday that the price cap will probably be adjusted a few times a year.