Cutting oil output risks global economy, warns US Treasury secretary
The world’s biggest oil-producing nations cutting production at a time of soaring energy costs is “unhelpful and unwise” for global economic growth, the US Treasury secretary has warned, amid intense pressure from sky-high inflation.
Ahead of meetings hosted by the International Monetary Fund in Washington this week, Janet Yellen said the move by Opec+ – the oil production cartel led by Saudi Arabia, plus Russia – risked undermining the world economy.
The Biden administration has reacted angrily to last week’s decision to cut daily output by 2m barrels, more than expected, describing it as a geopolitical move. Meanwhile, Yellen said it would risk hurting developing countries more than most.
“Opec’s decision is unhelpful and unwise,” she said in an interview with the Financial Times. “It’s uncertain what impact it will end up having, but certainly, it’s something that, to me, did not seem appropriate, under the circumstances we face. We’re very worried about developing countries and the problems they face.”
Her warning comes ahead of sharp downgrades for global growth expected from the International Monetary Fund this week. Attended by more than 190 countries from around the globe, the fund will hold its annual meeting against a backdrop of fragmenting cooperation between nations over the inflation shock exacerbated by Russia’s war in Ukraine. Discussions will also focus on the impact of rising interest rates around the world, and the effects of Russia’s war in Ukraine. Yellen said: “We’re going to exchange views on whether our countries are addressing these problems, and try to consider whether our collective reaction adds up to something that is sensible, and the best we can do, in that difficult environment.”
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