Speaking before the start of the Group of 20 finance ministers and central bank governors meeting in Bali, Yellen said efforts must be made to rein in two key economic fallout from the Russia-Ukraine crisis — namely, high fuel prices and increasing food insecurity. sweep across the US and worldwide. High energy costs were a major contributor to the rise in US inflation this week, he added. “We’re seeing negative knock-on effects from [the Russia-Ukraine] war in every corner of the world, especially with higher energy prices and growing food insecurity,” Yellen said. The price cap on Russian oil is one of our most powerful tools to address the pain that Americans and families around the world are feeling at the gas pump and in the grocery store right now. Janet Yellen US Treasury Secretary He said the US would continue talks with other countries to see “what we can do together to help others around the world affected by Russia’s war”. It includes addressing food insecurity and designing and implementing a price ceiling for Russian oil, he added. “The price cap on Russian oil is one of our most powerful tools to address the pain that Americans and families around the world are feeling at the gas pump and in the grocery store right now. A cap on the price of Russian oil will deny Putin the revenue his war machine needs.” As Washington bans Russian oil and European countries try to reduce their use of Russian oil, oil prices have risen. Crude oil prices rose above $120 a barrel in March after the start of the Russia-Ukraine war. Economists have warned that further bans could push prices up to $175 a barrel. Shell’s Vito Offshore oil platform moored at Kiewit Offshore Services while undergoing onshore construction in Ingleside, Texas, USA, Wednesday, April 6, 2022. Eddie Seal | Bloomberg | Getty Images The price ceiling mechanism involved the US and other countries forming a cartel to buy Russian oil at a low enough price to keep Russian oil production profitable and future supply, but at the same time starve Russia of being able to finance the war in Ukraine. “We’re going to build on the historic sanctions that we’ve already put in place that make it harder for him to wage war or grow his economy,” Yellen said. Russia has remained silent on the proposal, while other countries such as India have not weighed in. On Thursday, China said the price cap could worsen the crisis in Ukraine. Chinese Commerce Ministry spokeswoman Shu Jueting said a price cap would be complicated and instead urged countries to continue peace talks to end the war. Yellen said she hoped the price cap would be attractive to many Russian oil importing companies as it would mitigate high import costs due to insurance and financial bans on Russian oil deliveries.
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Late last month, the European Union imposed a ban on the insurance of ships carrying Russian oil. “So I hope that China and India will see that having a price cap would serve their own interests in reducing the price they pay for Russian oil, they are major importers,” Yellen said. “But even if they don’t stick to the price cap, I think it’s certain that many countries that import Russian oil will be affected by the ban on insurance and financial services that the EU, and possibly the UK and the US, will put in place. The finance minister said that without the price cap, “we would likely see much higher global prices because this ban would result in … a significant shutdown for Russian oil.” — CNBC’s Evelyn Cheng contributed to this report.
