Janet Yellen Says It’s in Russia’s Interest to Go Along With an Oil Price Cap

On the eve of a meeting of finance chiefs from the world’s major economies in Bali, Indonesia, Treasury Secretary Janet Yellen continued to push for a price cap on Russian oil, calling it “one of our most powerful tools” to alleviate the painful leaps in energy and food prices.

Ms. Yellen said at a news conference on Thursday that imposing a price limit on Russian oil would not only reduce President Vladimir V. Putin’s ability to continue waging a brutal war in Ukraine and shrink the Russian economy but also lower global oil prices.

Russia could still export oil at a profitable price if there was a cap, she said, and maintain access to markets that have restricted imports of Russian energy as part of sanctions against Moscow. At the same time, consumers around the world, including in India and China, which have been buying more Russian crude, would get some relief at the gas pump and grocery store.

Russia is still earning substantial revenue from oil, with higher prices making up for lower output. The idea of a cap is to limit how much Russia can make while still keeping markets well supplied. At a time when the West is seeking to punish Mr. Putin while seeking to tame spiraling oil prices, Ms. Yellen suggested that operating under a cap was better for Russia than with no cap, since Russia would still be able to make a profit, though less than if it was able to sell unhindered at current prices.

“We’re proposing an exception that would allow Russia to export as long as the price doesn’t exceed a to-be-determined level,” Ms. Yellen said. Given that more Russian oil would be “shut in” if Russia didn’t agree to a cap, the policy is “something that they should be willing to go along with,” she said.

Noting the deteriorating conditions in the global economy, Ms. Yellen squarely placed the blame on Russia’s invasion of Ukraine, saying it had caused “negative spillover effects in every corner of the world.”

In the latest evidence of that worsening outlook, a revised forecast from the European Commission estimated on Thursday that economic growth in the European Union would drop from 2.7 percent this year to 1.5 percent next year because of fallout from the war in Ukraine. Annual average inflation in the European Union is expected to reach a record high of 8.3 percent this year, revised up from a forecast of 6.8 percent just a few months ago.

Because of its scorn for international law, Russia has “no place” at the meeting of the Group of 20 nations, Ms. Yellen said.

Russia has so far gotten a frosty reception from some attendees at recent G20 gatherings. Secretary of State Anthony J. Blinken, along with several other Western ministers, refused to meet with Russia’s foreign minister, Sergey V. Lavrov, in Bali last week. Mr. Lavrov walked out of a session when Russia was criticized about the war in Ukraine. Anton Siluanov, Russia’s finance minister, is set to speak virtually at the upcoming meeting of finance leaders.

At the news conference, Ms. Yellen said, “It’s troubling to see how the war is contributing to higher energy costs, food insecurity and hunger for the most vulnerable globally.”

She called on China and other countries to restructure debt payments for struggling economies. The United States, she added, has committed $70 million to the International Monetary Fund for zero-interest loans to the world’s poorest countries.