Oil price surge: US braces for winter spike ‘risk’ as EU cuts back on Russian reserves | City & Business | Finance

Janet Yellen claimed gas prices in the US could soar when European Union member states cut back on buying Russian oil. Joe Biden’s Treasury Secretary also suggested the proposed price cap by Western nations has been designed to keep Russian oil rates in check.

Ms Yellen told CNN: “It’s a risk, and it’s a risk that we’re working on the price cap to try to address.”

She also explained how the possible price increase could come because the EU “will cease for the most part buying Russian oil” and impose a ban on services that allow Russia to ship oil by tanker.

G7 nations agreed to instate a price cap plan to deny insurance, finance, brokering, navigation and other services to oil cargoes priced above a yet-to-be-determined price cap on crude and oil products.

Ms Yellen said such a price cap is aimed at lowering revenue from Russian reserves which could be used as Vladimir Putin continues to wage his war against Ukraine.

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However, the Kremlin has warned the West against introducing a price cap.

Russia’s foreign ministry spokeswoman Maria Zakharova said: “The collective West does not understand: the introduction of a cap on prices for Russian energy resources will lead to a slippery floor under its own feet.”

Vyacheslav Volodin, the speaker of Russia’s lower house of parliament, added: “What G7 state officials call a price ‘ceiling’ will become a price floor.

“The global market is not limited to seven countries.”

Ms Yellen’s comments come just days after Washington warned price cap flouters could face sanctions.