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

(AP Photo/Charlie Neibergall)...

Associated Press

Donald Trump stored, showed off and refused to return classified documents, indictment says

An indictment charging former President Donald Trump with mishandling classified documents has been unsealed.

2 days ago

FILE - A bottle of Jack Daniel's Tennessee Whiskey is displayed next to a Bad Spaniels dog toy in A...

Associated Press

Ruff day in court: Supreme Court sides with Jack Daniel’s in dispute with makers of dog toy

The Supreme Court on Thursday gave whiskey maker Jack Daniel's reason to raise a glass, handing the company a new chance to win a trademark dispute with the makers of the Bad Spaniels dog toy.

3 days ago

(Pixabay Photo)...

Associated Press

6 arrested in alleged scheme to fraudulently collect millions in COVID aid meant for renters

Six people from Washington, Arizona and Texas have been arrested and accused of fraudulently obtaining millions of dollars of COVID-19 aid from an assistance program meant for renters, federal prosecutors said.

3 days ago

FILE - Protesters stand outside of the Senate chamber at the Indiana Statehouse on Feb. 22, 2023, i...

Associated Press

LGBTQ+ Americans are under attack, Human Rights Campaign declares in state of emergency warning

The Human Rights Campaign declared a state of emergency for LGBTQ+ people in the U.S. on Tuesday.

5 days ago

FILE - People wait in line outside the Supreme Court in Washington to listen to oral arguments in a...

Associated Press

Supreme Court opened the door to states’ voting restrictions. Now a new ruling could widen them.

Within hours of a U.S. Supreme Court decision dismantling a key provision of the Voting Rights Act, Texas lawmakers announced plans to implement a strict voter ID law that had been blocked by a federal court. Lawmakers in Alabama said they would press forward with a similar law that had been on hold.

5 days ago

Gavel (Pexels Photo)...

Associated Press

Ex-teacher sentenced to prison for making death threat against Arizona legislator

A former Tucson middle school teacher was sentenced Tuesday to 2 ½ years in prison after pleading guilty to making a death threat against Arizona state Sen. Wendy Rogers.

5 days ago

Sponsored Articles

...

Desert Institute for Spine Care

Spinal fusion surgery has come a long way, despite misconceptions

As Dr. Justin Field of the Desert Institute for Spine Care explained, “we've come a long way over the last couple of decades.”

(Photo: OCD & Anxiety Treatment Center)...

OCD & Anxiety Treatment Center

Here’s what you need to know about OCD and where to find help

It's fair to say that most people know what obsessive-compulsive spectrum disorders generally are, but there's a lot more information than meets the eye about a mental health diagnosis that affects about one in every 100 adults in the United States.

...

Day & Night Air Conditioning, Heating and Plumbing

Company looking for oldest air conditioner and wants to reward homeowner with new one

Does your air conditioner make weird noises or a burning smell when it starts? If so, you may be due for an AC unit replacement.

Yellen warns of failure to agree on Russia oil price cap