The Group of Seven (G7) countries, represented by their respective finance ministers and central bank governors, on Thursday discussed the creation of a cartel of buyers in order to control the price of Russian oil. This was announced by US Treasury Secretary Janet Yellen in comments to reporters between G7 meetings.
“You need a significant cartel in order to accomplish that, maybe the EU alone wouldn’t be sufficient… The idea of using sanctions, secondary sanctions has come up. The idea of tariffs instead of price caps could be an alternative sort of approach,” Yellen said, referring to EU plans to place an embargo on Russian oil imports in the face of the crisis in Ukraine. Earlier this week, she stressed that “it is critically important that [EU countries] reduce their dependence on Russian oil.”
According to Yellen, the goal of the cartel would be to “keep some Russian oil flowing to the market to hold down global prices so we don’t have undue negative impacts,” otherwise the move could trigger “stagflationary type of shocks.” The cartel would be tasked with putting a cap on the price of the Russian commodity.