Yellen: "If EU Bans Russian Crude Oil Imports, US Oil Prices Will Surge"

Janet Yellen, U.S. Secretary of the Treasury (Photo by Reuters)

[Asia Economy Reporter Yujin Cho] Janet Yellen, U.S. Treasury Secretary, stated on the 11th (local time) that Americans may experience a sharp rise in oil prices if the European Union (EU) implements a ban on Russian oil purchases starting this December.

In an interview with CNN, Secretary Yellen said, "That is the risk we are trying to address through the price cap on Russian oil," responding in this manner.

She added, "Since the EU plans to mostly stop purchasing Russian oil this winter and also ban services that enable the transportation of Russian oil via tankers, there is a possibility that oil prices will rise."

She continued, "The price cap on Russian oil was designed to reduce Russia's revenues used for illegal war while maintaining the supply of Russian oil to lower international oil prices."

Secretary Yellen emphasized, "We are implementing this to avoid a sharp rise in oil prices in the future."

The Group of Seven (G7), including the United States, has agreed to implement a price cap on Russian oil and petroleum products in line with the EU's timing for the Russian oil ban and is currently coordinating the details.

When asked about the possibility of an economic recession following the Federal Reserve's (Fed) consecutive large interest rate hikes, Yellen said, "That is a risk that arises when the Fed tightens monetary policy to resolve inflation issues," adding, "We are monitoring this risk."

She further stated, "Although economic growth is slowing, considering that the economy was in a difficult state when President Joe Biden took office, this is a natural phenomenon," and said, "Thanks to the 'American Rescue Plan,' we experienced rapid growth and job recovery, and the labor market remains strong."

Regarding the possibility of a soft landing for the economy, she said, "For a soft landing that lowers inflation while maintaining a strong labor market, the Fed needs great skill as well as some luck," and added, "I believe there is a way to achieve this."