Yellen defends Russian oil price cap in wake of OPEC+ retaliation

Treasury Secretary Janet Yellen touted US and European efforts to impose a price cap on Russian oil and choke off a massive revenue stream from Moscow despite OPEC+ retaliation cuts this week.

Speaking Thursday to the think tank Center for Global Development, Yellen said the price cap on Russian oil – which will impose a ban on sea transport to other countries across the border – is designed to keep oil flowing into global markets at lower prices, “which particularly benefits low- and middle-income countries”.

European Union countries agreed on Wednesday to introduce the price cap the Group of Seven Wealthy Nations plans to introduce by December 5 to punish Russia for the war in Ukraine. Yellen is a big advocate of the price cap, with the Treasury trying to get as many nations into the buyer cartel as possible.

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Treasury officials have previously argued that the price cap will reduce the revenue the Kremlin generates from oil by tens of billions of dollars annually and will also discourage production.

BIDEN ADMIN WEIGHS ENTIRE BLOCK ON OFFSHORE OIL DRILLING WHILE GAS PRICES CONTINUE TO RISE

Janet Yellen

Janet Yellen, pictured here, delivers a press conference at the US Treasury Department’s Cash Room on July 28, 2022 in Washington, DC. (REUTERS/Jonathan Ernst / Reuters Photos)

Yellen said Thursday she expects the cap “will hurt revenue [Russian President Vladimir Putin] used to fund his illegal war. These efforts must continue.”

Her comments come just a day after a coalition of oil-producing countries led by Russia and Saudi Arabia — known as OPEC+ — announced they would cut oil production by 2 million barrels, the first major cut in two years. The move threatens to raise oil prices at a time when the world is already battling record-high inflation.

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AMERICANS SHOULD PREPARE FOR FURTHER RISING GAS PRICES, ANALYSTS WARN

The White House condemned production cuts that threaten to push up gas prices with the midterm elections just a month away.

President Biden

President Biden boards Air Force One at Andrews Air Force Base in Maryland on Thursday, October 6, 2022 for a flight to Poughkeepsie, New York. (AP Photo/Andrew Harnik/AP Newsroom)

“The President is disappointed by OPEC Plus’ short-sighted decision to cut production quotas as the global economy grapples with the ongoing negative impact of Putin’s invasion of Ukraine,” said Brian Deese, director of the National Economic Council, and Jake Sullivan National Security Advisor said in a statement.

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Yellen did not comment on the move on Thursday, but she previously warned that Americans could see prices at the pump rising again as the EU seeks to reduce its reliance on Russian oil.

oil pump jack

Oil pump jacks stand at the Inglewood oil field on November 23, 2021 in Los Angeles. President Biden announced a plan to release oil from the Strategic Petroleum Reserve to curb high gas prices. ((Photo by Mario Tama/Getty Images)/Getty Images)

“It’s possible that this could lead to an increase in oil prices,” she said in an interview on CNN in September.

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After hitting a record high of $5.01 a gallon in mid-June, a gallon of gasoline now averages about $3.86, according to AAA. While that’s down 23% from the summer high, it’s still 29% higher than a year ago.

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