US Treasury Secretary Janet Yellen has emphasized the significant impact of the Group of Seven (G7)-led price cap on Russian oil over the past 10 months. Speaking at the International Monetary Fund and World Bank meetings in Marrakech, Morocco, Yellen stated that the price cap had sharply reduced Russia’s revenues and stressed the importance of maintaining substantial and increasing costs on Russia in response to its war in Ukraine. She underlined that the conflict in Ukraine remained a substantial headwind for the global economy.
Yellen also commented on the IMF’s updated outlook, noting that the global economy was in a better position than expected at the previous year’s annual meetings. While some countries, including China and the euro zone, were experiencing slowing growth, she did not observe signs of broad spillovers destabilizing the global economy.
The US Treasury Secretary further condemned the recent attack on Israel by Hamas gunmen from the Gaza Strip. However, her prepared remarks did not address the potential economic impact of this incident. Yellen assured that the Biden administration would collaborate with Congress to ensure continuous support for Ukraine, emphasizing that support for Ukraine must not be interrupted.
Yellen acknowledged the complications in budget negotiations and Republican infighting in the House of Representatives, which prompted concerns about potential disruptions to US aid for Ukraine. She committed to working with a global coalition to counter the funding Russia requires for its war in Ukraine.
Yellen emphasized the effectiveness of the price cap on Russian oil, stating that it had significantly reduced Russian revenue over the last 10 months while contributing to stable energy markets. Despite the cap, global energy prices remained largely unchanged, forcing Russia to either sell oil at a substantial discount or invest significant amounts in its alternative ecosystem.
The G7 countries imposed sanctions in December that restrict services provided by shippers or insurers in G7 nations for Russian oil exports when the price exceeds $60 a barrel. Yellen voiced support for taxing windfall proceeds from immobilized Russian sovereign assets in specific clearinghouses and utilizing the funds to support Ukraine.
She underscored the need to continue imposing severe and escalating costs on Russia, emphasizing that Russia must pay for the damage it has caused. Yellen also noted that Washington’s focus on the global macroeconomy and addressing global challenges continues to shape its approach to US-China relations, and she intends to meet with China’s top central banker, Pan Gongsheng, during her time in Marrakech.
