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U.S. and Europe look to cap global oil prices, Russian revenue

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Yahoo Finance Live anchors discuss the U.S. and European allies potentially coming together to form a buyers' cartel to restrain Russian oil profits and energy prices.

Video Transcript

BRIAN SOZZI: Number three. The US and Europe are working together to cool surging oil prices. Treasury Secretary Janet Yellen said the US is in talks with European allies to form a buyer's cartel and set a cap on the price of Russian oil. The goal of that would be to keep Russian oil available to buyers like India and China, while restricting Russian revenue from the sales. And, Julie, good for oil prices. Potentially.

JULIE HYMAN: Well, good for oil prices, but the idea is to cap the oil prices. That's the goal. I mean, basically, the US government has a big problem. And when I say the US government, I should say-- should say the administration has a big problem.

The big problem is inflation, which is all of our problem, of course. And the even bigger challenge for the administration is trying to figure out what they can do about it, which, as we've been talking a lot about in recent days, is pretty limited. So if they can help with one of the biggest levers on inflation and one of the most visible inflation impacts-- that is gasoline prices-- then they're going to do that.

Can they do that by getting together with Europe trying to figure out this buying cartel, trying to put a cap on some of the prices? I don't know. It's something that would be unusual versus what we have seen in the past. But I think that they're trying to be creative at this point.

BRIAN SOZZI: Look at those prices.

JULIE HYMAN: Yeah, I mean, you know--

BRIAN SOZZI: Put a cap on my gas prices. Please, help me out. Help me out, Yellen, please. Help me.

JULIE HYMAN: I think it's a matter of trying to think outside the box and what can they do. I don't know if this is going to actually happen, if they're going to set up this buyers cartel, if they're going to be successful. But, you know, it seems like they're willing to try, right?


BRIAN SOZZI: I'll take it. I'll take it.

- Still, I mean, the historical context of this, too. Even last month this time, on the 11th of May, we had actually seen Draghi, Italia-- Italia-- Italy's prime minister visit US President Joe Biden and really kind of initiate some of these discussions around where a cartel could come forward. And that's where we saw more of the suggested pressuring to really put OPEC in a position to produce more and alleviate some of the pain.

BRIAN SOZZI: And I'll just add quickly these energy prices at these high levels is really starting to, I would say, spook a lot of strategists on Wall Street. I have Julian Emanuel, a friend of the show over at Evercore ISI, slashing his S&P 500 target again this year. This comes after Lori Calvasina slashed her rating earlier in the week in large part because of sustained high energy prices.

Now, in a worst case scenario, if these prices stay at these levels, Julian thinks maybe we could hit a recession next year, and that can bring the S&P 500 to 2,900. But still, that's a lot of ifs.

JULIE HYMAN: To be clear, 4,300 is what he's slashing it to, which is still, you know, not terrible. Like Lori, he's not expecting the bottom to fall out. But that 2,900 is the bear case call that you're talking about if the oil prices continue to go up. And that would be a little more-- a little scarier.

- Cap my prices.