South Korea on July 19 said it was willing to support U.S.-led plans to impose a price cap on Russia oil, agreeing with Washington's initiatives to limit revenue to Moscow while mitigating global inflation.

U.S. Treasury Secretary Janet Yellen and South Korean Finance Minister Choo Kyung-ho also agreed that they could inject liquidity into currency markets if necessary, without elaborating, Korea’s finance ministry said in a statement after a bilateral meeting between the two leaders.

Yellen, in the wake of Russia’s invasion of Ukraine, has been championing a price cap on Russian oil and is seeking to build support for the move from key allies including Seoul, in a bid to avert a price spike that could prompt a recession.

South Korea imported about 5% of its crude oil from Russia last year, according to data from Korea National Oil Corp.’s Petronet.

No ceiling has been set but a price-cap measure joined by major Russian oil buyers including the European Union could force Moscow to either give up part of their output or sell the balance of its production at the cap.

The two sides have been discussing the issue at least since early July, when they had a teleconference, during which Choo asked for further details on Washington’s plans to limit Russia’s oil earnings.

Yellen told reporters on July 16 that she had held productive bilateral meetings about the proposed price cap with more than six counterparts on the sidelines of a meeting of Group of 20 finance officials on the Indonesian island of Bali. 

South Korea’s Choo also said the country will closely monitor onshore currency markets and review contingency plans to stabilize the market if needed, as the won was hovering a 13-year low of around 1,300 won per dollar.

Comments