Yellen walks back $60 price cap for Russian oil: ‘No decision’ yet

Treasury Secretary Janet Yellen on Friday responded to speculation that the G7 countries were considering a $60 a barrel price cap for Russian oil, stressing that no decision had been made yet.

Earlier this week, Yellen hinted that Russia could still benefit from oil sales at $60 a barrel, saying a price in that range would let Russia “produce and sell oil profitably.” But on Friday, she said her comment at the time shouldn’t suggest that the G7 has settled on a price in that range.

“I didn’t say that a price on the order of $60 was being considered,” Yellen said. “What I was trying to say is that there are several benchmarks that are relevant when deciding what a price should be.”

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Treasury Secretary Janet Yellen testifies in Washington, DC

Treasury Secretary Janet Yellen in Washington, DC Yellen is leading efforts to reach agreement with the G7 on a Russian oil price cap. (Tom Williams/Pool via AP/Associated Press)

One benchmark is Russia’s marginal cost of oil production. She pointed out that the cap the G7 will impose in December to cap Russian oil profits that help fund their war against Ukraine must be above Russia’s cost per barrel.

“Ask for a lower price would certainly make Russia want to lock up the oil,” she said. “They don’t want to sell oil at a loss.”

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Yellen added that once the cap is set, it can be adjusted over time to reflect changing economic circumstances.

Another factor is historical prices for Russian oil, which the G7 will consider when setting a precise cap.

“We look historically at oil prices that Russia has earned and in that context I mentioned a specific number,” she said, referring to her comment earlier in the week. “But no decision has been made yet and I haven’t said that [those are] the prices… under consideration. No decision has been made.”

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Under the G7 plan, Russian crude oil transported by sea would not benefit from insurance, finance, brokerage or other financial services normally offered by G7 nations unless that oil is sold below the cap . The goal is to prevent the sale of oil above the cap and free Russia of profits that it can pour into the fight against Ukraine.

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“Russia should not benefit from starting this cruel war in Ukraine and should not benefit from the gains resulting from these atrocities,” Yellen said on Friday.

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