Oil prices could rise in winter, Treasury secretary warns

Yellen said a proposed price cap on Russian oil could maintain oil supplies at an affordable price while lowering the Kremlin's revenue.

Updated: September 12, 2022 - 11:31am

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Treasury Secretary Janet Yellen is warning that oil prices may increase in the winter as tougher sanctions will be imposed on Russian oil and the U.S. and allied countries try to "finalize a price cap" on such oil – a move Moscow warns will backfire.

When asked Sunday on CNN about whether Americans should be ready for gas prices to rise this winter, Yellen replied: "Well, it's a risk. And it's a risk that we're working on the price cap to try to address."

The United States, Japan, Germany, Britain, France, Italy and Canada are working with the European Union to implement a price cap on Russian oil. 

The sanctions are being imposed in response to Russia's invasion in February of Ukraine.

"This winter, the European Union will cease, for the most part, buying Russian oil," Yellen said. "In addition, they will ban the provision of services that enable Russia to ship oil by tanker. And it is possible that that could cause a spike in oil prices."

Earlier this month, Russia claimed "mechanical problems" caused it to indefinitely shut down the Nord Stream pipeline that provided natural gas to Europe. Before this, Russia was supplying nearly as much oil to the world as it was before the invasion of Ukraine.

Russian President Vladimir Putin said last week called the cap a “stupid” idea and said his country will in respond by "freeze" European countries if Western nations impose such a cap.