US’ Bessent blames high energy prices on Ukraine’s Russia strikes

WASHINGTON – US Treasury Secretary Scott Bessent said Ukrainian drone strikes on Russian energy facilities were one reason for rising global energy prices, citing those attacks before mentioning the war against Iran when asked about the elevated cost of living in the US. “We are going through an energy shock right now, due to both the war in Ukraine, because Ukraine has decided that they want to blow up Russian energy assets and refined products – so that is creating upward price pressure on a global basis – and then the conflict in Iran,” Bessent said on Fox News on Sept 2. Disruption of shipping through the Strait of Hormuz because of the war has led to a surge in global energy prices over the last six months, pushing oil up to around US$100 a barrel and fuelling global inflation.Renewed clashes this week have pushed up oil prices again. Bessent had earlier suggested oil pipelines would eventually help energy suppliers bypass Hormuz, saying it would become irrelevant in the years to come as suppliers develop other energy routes. Bessent’s remarks were consistent with the administration’s willingness to pressure Ukraine – and court Russia – in pursuit of a potential diplomatic deal to end the war.Bessent met with Russian Finance Minister Anton Siluanov at a gathering in Asheville, North Carolina, despite European officials shunning Moscow’s envoy.Vice-President J.D. Vance previously discussed the global market impact of Ukraine’s strikes on Russia with President Volodymyr Zelensky in late July.The strikes have forced Moscow to extend a ban on diesel exports through the end of the month.That development, combined with relatively fewer cargoes of fuel making it through the Strait of Hormuz than crude, has tightened supplies worldwide. US diesel exports have surged to record levels recently to try to fill the gap, but that has meant domestic inventories have plunged.East Coast diesel stocks are now at the lowest on record heading into the winter months.US petrol pump prices remain above US$4 a gallon, the highest for this time of year on record, while retail diesel prices also march toward record highs.Ukraine has been struggling to defend its territory since Russia’s full-scale invasion in 2022, and its strikes on Russian energy facilities have successfully crimped energy revenues that are helping fuel the Kremlin’s war effort – forcing Moscow to cut costs and shift spending. BLOOMBERG