A senior US Treasury official said a proposal being explored by several of the world’s leading economies to cap the price of Russian oil exports will be crucial for preventing another global price spike to around $140 a barrel.

The official spoke to reporters in Tokyo where US Treasury Secretary Janet Yellen has begun a 10-day trip to Asia. She’ll also visit South Korea and will attend a gathering of finance ministers from Group of Twenty countries in Bali July 15-16. 

At each stop she’s planning to urge government officials to support the price cap plan. G-7 leaders agreed last week to explore the price limit plan. 

European Union countries are already on track to end most oil imports from Russia by year’s end. Separately, the EU and UK are planning to ban the insurance of tankers carrying Russian petroleum products.

Because the EU, UK and US insure an estimated 90% of Russia’s seaborne oil shipments globally, the move could deprive the global market of as much as 5 million barrels a day of oil and refined petroleum products. 

Pulling that much Russian product off the market would increase the price of oil significantly, possibly to about $140 a barrel, according to analysis done by the Treasury Department, the official said. The official emphasized that was based on modeling estimates that may not prove highly accurate.

Prices, which rose above $120 a barrel in June, currently sit at around $103 a barrel.

The Biden administration is keen to increase the economic pain for Moscow over its invasion of Ukraine in February. The US and its allies have already imposed punishing sanctions, but with oil and gas prices rising since the war began, Russia has seen revenue for energy exports increase dramatically, helping offset the damage.

Closing the tap on Russian oil completely would also be economically and politically dangerous in a world beset with inflation. 

President Joe Biden’s Democratic Party may face significant losses in Congressional elections this November, largely because of dissatisfaction over consumer prices that have risen at the fastest pace since the 1980s.

Backers of the price-cap plan would like to set a limit for Russian oil just high enough to give Moscow an incentive to keep exporting. Estimates have put that in a range of $40-$60 a barrel.

Japan, which has substantial imports of Russian energy, has so far not backed the plan. The Treasury official said Tokyo is likely looking for reassurance that the price cap would not be set too low, thereby removing Russia’s incentive entirely to continue with exports.

The proposal has faced extensive criticism for being overly complex and hard to implement.

Adam Posen, president of the Peterson Institute for International Economics in Washington, said the plan relies heavily on the assumption that European countries will follow through on the import and insurance bans.

“If the Europeans, in the face of impending recession and impending political problems, cave on their posturing that they would do a full stop to Russian oil imports, then this goes away,” he said in an interview last week.