Publications: Notes at the Margin

Leveraging Oligopsonistic Market Power to Lower Oil Prices (February 27, 2023)


This report explains the G7’s success in limiting Russian oil revenue, which came much to our surprise. As we note below, we expect that US Treasury Secretary Janet Yellen knew that the program would work by limiting Russian oil sales to just two primary buyers: Russia and China.


Yellen did not explain but likely knew also that the program would drive oil prices down. While the world scoffed at President Biden’s attempt to keep Saudi Arabia from cutting production and raising prices, the Secretary quietly succeeded in slashing oil producers’ incomes, perhaps as much as fifty percent.


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