Yellen Blasts OPEC’s Oil Output Cut as Bad for Global Economy

OPEC+ decision last week to cut oil production is unhelpful and unwise for the global economy – especially for emerging markets already struggling with high energy prices – under the circumstances the world faces, US Treasury Secretary Janet Yellen said ahead of the IMF and World Bank’s annual meetings in Washington next week.

Blasting the move by the oil cartel backed by Saudi Arabia and Russia in defiance of US pressure to keep global oil prices down, Secretary Yellen stressed the Biden administration has been loudly critical of the decision that she personally finds inappropriate.

Yellen confirmed that Washington has high hopes a plan will be created by the US and G7 countries to set a price cap on Russian oil exports in order to stabilize global fuel prices that the output cut could raise to above $100 a barrel and force the US to tap its strategic reserves.

However, she did not disclose any new decisions regarding it.

Such a plan is also seen as a way to also deprive Moscow of revenue to finance its war in Ukraine although many analysts believe that Russia’s oil export profits are unlikely to suffer even with production cuts given the rise in oil prices.

Experts even believe that Moscow may introduce even larger output cuts than those announced by OPEC+ in response to the oil price cap the EU announced earlier this week.

It is expected that the IMF and World Bank’s meetings will be dominated by discussions of high inflation and commodity prices, the impact of the sharp tightening of monetary policy by many central banks, and the economic and financial impact of the war in Ukraine.

Amid growing frustration in Washington that some allies are behind in terms of fulfilling their vows to help Ukraine financially, the Biden administration is hoping to use these meetings to also push EU countries to deliver economic aid much more rapidly.

Yellen noted that the US had delivered $8.5bn in grants for Ukraine, adding that another $4.5bn package was just approved by Congress.

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