U.S. Treasury Secretary Janet Yellen criticized the decision by OPEC+ oil producers over the weekend to cut output, saying it was “unconstructive” and would add to the uncertainty overhanging global growth.
“It’s a very unconstructive act at this time when it’s important to try to hold energy prices down,” Yellen told reporters Monday after a speaking engagement in New Haven, Connecticut.
She spoke after the OPEC+ announcement sent Brent crude up to just below $85 as of Monday afternoon in the U.S. — or about 6% above its Friday close. The moved spurred speculation among some traders that $100 a barrel could again be in sight.
“I’m not sure yet just what the price impact will be,” the Treasury chief said. “But clearly, it’s not a positive for global growth, and it adds to uncertainty and burdens at a time when inflation is already high.”
The move could complicate the task of central banks, feeding through to higher consumer prices, while damping growth.
Inflation in the U.S. has declined meaningfully since its peak of 9.1% in the year through last June, and dropped to 6% in February, as measured by the consumer price index.
In a March 20-27 Bloomberg survey, economists projected the U.S. economy would expand by 1% this year, compared with 2.1% in 2022. Respondents put the probability of a U.S. recession in the next 12 months at 65%.
Meantime, Yellen rejected the notion that rising oil prices would force the U.S. and its allies to adjust their price cap on Russian oil that utilizes maritime services from Western nations — which sits at $60 a barrel.
“I don’t know that this is significant enough to have any impact on the appropriate level of the price cap,” she said. “Of course, that’s something that, if we’ve decided that it’s appropriate to revisit, could be changed, but I don’t see that that’s appropriate at this time.”
