Treasury Secretary Janet Yellen on Friday walked back speculation that G7 nations are considering a $60 per barrel price cap on Russian oil and stressed that no decision has been made.
Earlier this week, Yellen suggested that Russia could still profit from oil sales at $60 per barrel by saying a price in that range would let Russia "profitably produce and sell oil." But on Friday, she said her comment then was not meant to suggest the G7 has decided on a price in that range.
"I did not say that under consideration is a price in the $60s," Yellen said. "What I meant to say is there are several benchmarks that are relevant in deciding what a price should be."
Treasury Secretary Janet Yellen in Washington, D.C. Yellen is spearheading efforts to agree on a Russian oil price cap with G7 nations. (Tom Williams/Pool via AP / Associated Press)
One benchmark is Russia’s marginal cost of producing oil. She indicated that the cap, which the G7 will impose in December in an effort to limit Russian oil profits that help fund its war against Ukraine, will need to be above Russia’s cost-per-barrel.
"To charge a price less than that would certainly cause Russia to want to shut in the oil," she said. "They don’t want to sell oil at a loss."
Russian President Vladimir Putin in Moscow, Friday, Sept. 30, 2022. G7 nations are pushing to impose a price cap on Russian oil in early December. (Grigory Sysoyev, Sputnik, Government Pool Photo via AP / AP Newsroom)
Yellen added that once the cap it set, it can be adjusted over time to reflect changing economic circumstances.
Another factor is historical prices of Russian oil, which the G7 will examine as it sets a precise cap level.
"We’re looking historically at what have oil prices been that Russia has earned, and it was in that context that I mentioned a specific number," she said, referring to her comment earlier in the week. "But no decision has been made, and I did not say that [those are] the prices… under contemplation. No decision has been made."
A general view shows an oil treatment plant in the Yarakta Oil Field, owned by Irkutsk Oil Company (INK), in Irkutsk Region, Russia March 10, 2019. (REUTERS/Vasily Fedosenko / Reuters Photos)
Under the G7 plan, Russian crude oil that is transported over water would not benefit from insurance, finance, brokering or other financial services usually provided by G7 nations unless that oil is sold under the cap. The goal is to discourage the sale of oil above the cap and starve Russia of profits it can direct toward fighting Ukraine.
"Russia should not profit from having started this atrocious war in Ukraine and shouldn’t be benefiting from profits that result from those atrocities," Yellen said Friday.