Yellen warns of failure to agree on Russia oil price cap

Aug 31, 2022, 12:21 PM | Updated: 12:31 pm

WASHINGTON (AP) — Treasury Secretary Janet Yellen on Wednesday warned that a failure to place a price cap on Russian oil would hurt the global economy.

“Without a price cap, we face the threat of a global energy price spike if the majority of Russian energy production gets shut in,” Yellen said at the start of a meeting with her British counterpart, Nadhim Zahawi.

The European Union has decided to ban nearly all oil from Russia by the end of the year. It also will ban insuring and financing the maritime transport of Russian oil to other countries. Unless a price cap is implemented, prices will almost certainly spike.

The U.K. and other Group of Seven countries tentatively agreed in June to pursue a ceiling on the price of Russian oil. Getting as many other nations as possible to agree to join a buyers’ cartel has been one of Treasury’s main objectives as it seeks to curb Russia’s ability to finance its war in Ukraine.

Yellen said there has been “substantial progress” toward making the price cap a reality and she was optimistic it would happen.

Zawahi, who became chancellor of the Exchequer on July 5, said Britain intends to “influence key nations” to join the plan.

The Kremlin’s main pillar of financial revenue — oil — has kept the Russian economy afloat despite export bans, sanctions and the freezing of central bank assets.

Limiting the price would reduce the Kremlin’s income from oil, and a cap would encourage the country to continue producing, Treasury officials have said. World leaders fear that Russia could, however, constrict its energy supply in retaliation, causing prices to spike.

Yellen said a price cap also would limit the impact of higher oil prices on inflation in consuming countries, with the cost of gasoline and diesel still squeezing consumers and businesses hard, especially in Europe.

To be effective, participating countries would have to collectively agree to purchase the oil at a lower-than-market price.

China and India, two countries that have largely resisted signing onto efforts to punish the Kremlin and have maintained business relationships with Russia during the war, will need to get on board.

Zawahi said “there is obviously some more to be done and we’re ready to work in particular to persuade more countries to support the measure,” citing India, Turkey, South Africa and others as possible participants.

Treasury leaders have been visiting allies and neutral parties in the war to call for their participation, even if informally.

Yellen traveled to the Indo-Pacific in July and Treasury Deputy Secretary Wally Adeyemo met with government ministers and business leaders in India in mid-August, in part to push for the price cap.

The Biden administration is keeping a close eye on the progress of the talks.

“We believe it’s not only an idea worth exploring, it’s an idea worth implementing,” John Kirby, a national security spokesman, told reporters Wednesday. “And we look forward to hearing what the finance ministers say at the end of the week.”

__

Associated Press reporter Aamer Madhani contributed to this report.

__

Follow AP’s coverage of Russia’s war in Ukraine at

https://apnews.com/hub/russia-ukraine.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Haitian migrant Gerson Solay, 28, carries his daughter, Bianca, as he and his family cross into Can...
Associated Press

US, Canada to end loophole that allows asylum-seekers to move between countries

President Joe Biden and Canadian Prime Minister Justin Trudeau on Friday announced a plan to close a loophole to an immigration agreement.
2 days ago
Expert skateboarder Di'Orr Greenwood, an artist born and raised in the Navajo Nation in Arizona and...
Associated Press

Indigenous skateboard art featured on new stamps unveiled at Phoenix skate park

The Postal Service unveiled the “Art of the Skateboard" stamps at a Phoenix skate park, featuring designs from Indigenous artists.
2 days ago
(Facebook Photo/City of San Luis, Arizona)...
Associated Press

San Luis authorities receive complaints about 911 calls going across border

Authorities in San Luis say they are receiving more complaints about 911 calls mistakenly going across the border.
8 days ago
(Pexels Photo)...
Associated Press

Daylight saving time begins in most of US this weekend

No time change is observed in Hawaii, most of Arizona, Puerto Rico, the U.S. Virgin Islands, American Samoa, Guam and the Northern Marianas.
16 days ago
Mexican army soldiers prepare a search mission for four U.S. citizens kidnapped by gunmen in Matamo...
Associated Press

How the 4 abducted Americans in Mexico were located

The anonymous tip that led Mexican authorities to a remote shack where four abducted Americans were held described armed men and blindfolds.
16 days ago
Tom Brundy points to a newly built irrigation canal on one of the fields at his farm Tuesday, Feb. ...
Associated Press

Southwest farmers reluctant to idle farmland to save water

There is a growing sense that fallowing will have to be part of the solution to the increasingly desperate drought in the West.
23 days ago

Sponsored Articles

...
Day & Night Air Conditioning, Heating and Plumbing

Prep the plumbing in your home just in time for the holidays

With the holidays approaching, it's important to know when your home is in need of heating and plumbing updates before more guests start to come around.
(Desert Institute for Spine Care photo)...
DESERT INSTITUTE FOR SPINE CARE

Why DISC is world renowned for back and neck pain treatments

Fifty percent of Americans and 90% of people at least 50 years old have some level of degenerative disc disease.
(Photo via MLB's Arizona Fall League / Twitter)...
Arizona Fall League

Top prospects to watch at this year’s Arizona Fall League

One of the most exciting elements of the MLB offseason is the Arizona Fall League, which began its 30th season Monday.
Yellen warns of failure to agree on Russia oil price cap