Treasury Secretary Janet Yellen on Monday called “unconstructive” the unexpected decision by OPEC+ countries to cut oil production, which caused a jump in commodity prices.
According to Yellen, the OPEC+ decision was an “unconstructive action” that will add uncertainty to the global growth outlook and increase the burden on consumers at a time of high inflation.
“OPEC has made a regrettable decision. I don’t know yet what the impact on prices will be. But I think we have to wait a little longer to assess the consequences of this step,” Yellen told reporters after the event at Yale University.
Yellen noted that lower gasoline prices from last year’s peak have helped contain inflation, and if that trend changes, “it won’t help global growth.” According to Yellen, “inflation is already high” and controlling prices is a priority.
President Joe Biden did not attach much importance to this cartel decision. Asked by a reporter about the possible ramifications of the decision, Biden, who was visiting a Cummins power plant in Minnesota today, suggested the cuts “won’t be as severe as you think”.
Benchmark oil prices jumped 6% on Monday after OPEC+ nations announced on Sunday they would cut production.
Asked about the impact of the $60-a-barrel cap on Russian oil imposed by Western allies, Janet Yellen said she didn’t see the OPEC+ production cut plan as a significant factor that “would have an effect on the appropriate ceiling level”. .
According to Yellen, the price cap on Russian oil is working, and putting this cap in place has led to deep discounts on Russian oil and boosted the bargaining power of buyers.
The US Treasury Secretary believes that the coalition countries can revise the level of the price cap if they believe that this change would be appropriate.
“But I don’t think it would be appropriate at this time,” Yellen added.
