- Treasury Secretary Janet Yellen indicated the EU and US are in talks to curb Russian oil revenue.
- It comes as Russia reels in billions from selling its oil and cheaper prices to China and India.
- Yellen eventually stressed that Congress should enhance independence by investing in clean energy.
The US and Europe are working hard on finding a way to limit the revenue Russia reels in from its oil sales, Treasury Secretary Janet Yellen has said.
At the same time, they don’t want any move to spur a spike in oil prices that could end in recession, she told the Senate Finance Committee.
“Negotiations are extremely active,” Yellen said Tuesday. “I think what we want to do is keep Russian oil flowing into the global market to hold down global prices, and try to avoid a spike that causes a worldwide recession.”
“But absolutely, the objective is to limit the revenue going to Russia,” she added.
There are different ways the US and EU could accomplish that, Yellen said. But she added the idea of the allies coming together as a buying block, with a cap on the price it’s willing to pay, was a “desirable strategy.”
Several analysts are predicting oil prices will surge to $140 a barrel this summer, as the US driving season gets going. WTI crude, the US benchmark, and Brent crude have both already risen more than 60% in 2022 so far, after Russia’s invasion of Ukraine.
The EU and US have imposed energy sanctions on Russia in response, and the European bloc has pledged to cut 90% of oil imports from the country by the end of this year.
Despite those sanctions, Russia is still pulling in revenue by selling its crude oil at cheaper prices. Countries like China and India are stepping in as buyers and snapping up the discounted Russian oil.
Moscow could bag $800 million a day from oil and gas revenues combined, according to a Bloomberg Economics forecast. In total, that could bring Russia’s oil and gas sales to $285 billion this year, for a potential 20% gain compared with 2021.
Yellen told the lawmakers the US should look to invest in clean and renewable energy, to reduce its dependence on energy imports.
“We’re part of global oil markets, which are subject to geopolitical influences,” she noted.
“Given the global nature of these markets, it’s virtually impossible for us to insulate ourselves from shocks like the ones that are occurring in Russia, that move global oil prices.”
