Secretary of the US Treasury Department Janet Yellen remarked on Thursday that putting a ceiling on the price of Russian oil will be necessary to help bring inflation down. This week, consumer inflation reported in the US reached 9.1 percent in June, marking a new 40-year high.

Ahead of the meeting of the G20 finance heads and central bank leaders in Bali, Indonesia, Yellen stated that efforts must be frittered away to rationalize two significant economic ramifications from the Russia-Ukraine turmoil. These “fallouts” are high fuel prices and soaring food insecurity, both of which are pervasive across the US and the rest of the world. Yellen’s comments were made before the meeting began.

She went on to say that the significant increase in energy cost was a major contributor to the recent jump in inflation in the US.

“We’re seeing negative spillover effects from [the Russia-Ukraine] war in every corner of the world, particularly with respect to higher energy prices, and rising food insecurity. A price cap on Russian oil is one of our most powerful tools to address the pain that Americans and families across the world are feeling at the gas pump and the grocery store right now.”

The United States would continue dialogues with other nations to determine “what they can do together” to aid people worldwide who the hostilities in the Russia-Ukraine conflict have victimized. She further said that this entails devising and enforcing a price ceiling for Russian oil and discussing the undernutrition problem.

The price of oil has skyrocketed due to sanctions placed on Russian crude by the US government and measures by European nations to reduce their reliance on Russian energy. Following the cessation of war between Russia and Ukraine in March, the price per barrel of crude oil climbed to more than $120. In the US, administration policies have throttled oil domestic production while US refining capacity has decreased as well. Refiners and oil exploration companies are not willing to risk capital to expand production and finding new sources for oil when they face additional regulatory burdens from the government. 

Economic experts have admonished that such prohibitions might drive prices as high as $175 per barrel, which would be unsustainable, the media report said.

The Treasury Secretary stated that global prices would likely be substantially “higher” without the price ceiling because the embargo would play a part in a considerable reduction in Russian oil exports.