Janet Yellen says US gas prices could spike this winter as oil soars once Europe stops buying Russian crude

Janet Yellen says US gas prices could spike this winter as oil soars once Europe stops buying Russian crude
Gas prices could rise again once the EU's ban on Russian seaborne oil kicks in, Treasury Secretary Janet Yellen has warned.Paul Sancya/AP Photo
  • Janet Yellen warned there's a risk US gas prices at the pump could rise again in winter.
  • The US Treasury chief said the EU's ban on seaborne Russian oil could cause crude prices to soar.

There's a risk US gas prices at the pump will soar again this winter as a partial European ban on Russian crude imports takes hold, Treasury Secretary Janet Yellen has warned.

The average price of gas in the US has fallen steadily since hitting a record in June, providing some much-needed relief as inflation remains near 40-year highs. But American drivers could well feel an impact if crude prices rise in the wake of European sanctions kicking in, according to Yellen.

"It's a risk," she told CNN's "State of the Union" Sunday, having been asked whether gas prices could rise again in 2022.

"This winter, the European Union will cease, for the most part, buying Russian oil," she said. "And, 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."

The EU is set to end all seaborne imports of Russian crude on December 5, fulfilling a pledge its members made when agreeing a sixth sanctions package against Moscow in June.


Yellen expects that embargo to push up oil prices as global supply tightens, which could in turn push up prices for US gas.

This summer, American drivers benefited from a slide in oil prices that has led to falling pump prices, according to the AAA. The national average price of gas has dropped for 11 weeks in a row, from a high of just above $5 a gallon in June to $3.72 on Monday, its data showed.

Concerns about the hit to demand from a recession and continuing COVID-19 curbs in China have weighed on the price of oil in recent months.

Yellen said the US-led proposal to put a limit on the price of traded Russian oil is key to holding back crude prices.

"Our price cap proposal is designed to both lower Russian revenues that they use to support their economy and fight this illegal war, while also maintaining Russian oil supplies that will help to hold down global oil prices," she said.


"So I believe this is something that can be essential, and it's something that we're trying to put in place to avoid a future spike in oil prices."

The G7 — which includes Canada, France, Germany, Italy, Japan, the UK, and the US — agreed to back the proposal earlier in September, with aim of implementing a Russian crude price cap by December 5.

The plan calls for countries to compel companies to refuse to provide insurance, financing, brokerage and other services to shipments or Russian oil and oil products that are priced above a set limit. The level of the cap has not been set yet.

But Goldman Sachs strategists among others have warned that any price cap will likely be "bearish in theory, bullish in practice" for oil, with Moscow likely to retaliate by slashing exports.

Key oil price benchmarks remained broadly unchanged at last check Monday, with Brent crude futures at just under $93 a barrel and WTI crude futures trading just under $87 a barrel.


Read more: Oil prices will surge to $125 a barrel next year despite the G7's cap on Russian crude, Goldman Sachs says