(Bloomberg) -- The Group of Seven has signaled that it’s comfortable with the European Union setting a price cap for exports of Russian diesel between $100 and $110 per barrel as the US and its allies try to avoid a major disruption in the market, according to a G-7 official.

An EU ban on importing processed petroleum products from Russia is set to take effect on Feb. 5, and the bloc is working with the G-7 to impose a price cap level for third-country sales. The European Commission, its executive arm, has proposed a cap level of $100. 

The G-7’s preferred range suggests it would prefer a higher price — driven by concern that setting too low a level risks causing price spikes or supply glitches in Europe — but that it could live with $100. The official notes a lack of spare capacity in the diesel market, as well as a number of maintenance-related outages.

Discussions are ongoing, but the sides are optimistic about reaching a deal before the EU import ban takes effect, the official said. 

It’s hard to know what the most recent prices of Russian diesel are because the market’s two main price publishers, S&P Global Commodity Insights, and Argus Media Ltd., recently halted some of their key assessments before the EU’s measures kick in.

Russian diesel has been selling recently for between $115 and $120 a barrel, the official said

Russian Refiners Churn Through Crude Ahead of EU Import Ban

The fuel had largely been holding well above $100 a barrel for months up until Jan. 10, according to data from S&P Global, better known by traders as Platts.

Headline diesel futures, which don’t include Russian supply, stood at about $125 a barrel on Friday, according to ICE Futures Europe data.

The EU, which is discussing the prices level over the coming days, needs to reach unanimous agreement in order to set a cap. The mechanism would function by banning the EU companies from providing insurance or financial services for the shipping of Russian fuels unless they’re sold under the price cap level. It has two aims: limiting Russia revenues without disrupting global energy markets.

The G-7 and the EU have already instituted a price cap for Russian crude oil. For refined fuels, they plan to impose two caps. One would apply to products that are at premium to crude oil like diesel. For discounted products like fuel oil, the EU is exploring a cap of $45 per barrel. 

EU to Battle on Oil Price Caps, Sanctions in Push to Hurt Russia

Those two ceilings would apply from Feb. 5, but a grace period would be granted to vessels carrying products purchased and loaded before that date and unloaded by April 1, according to a draft EU regulation seen by Bloomberg News.

Analysts already said that, even when the discussed level was $100 a barrel, the key thing for Russian exports was the European ban, which will shut off the nation’s top diesel export market, rather than the cap.

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