Yellen called the Russian invasion “brutal and unprovoked” on Wednesday, and stressed that the Treasury Department was committed to holding Russia “accountable for its actions.”
“The problem with blocking oil exports from Russia is that many countries, especially in Europe, are very dependent on this oil,” she said. “And we’re probably going to see prices skyrocket if we put a full ban on oil.”
Germany, for example, would be left behind – literally – if it stopped importing Russian gas. Germany is Russia’s biggest energy customer in the European Union, which depends on Moscow for around 40% of its natural gas.
“Globally, the fallout from the crisis is deepening economic vulnerabilities in many countries that are already facing higher debt burdens and limited policy options as they recover from Covid-19,” Yellen said.
Energy prices were pushed higher by supply concerns from Russia, the world’s largest crude oil exporter.
“We are witnessing the vulnerability that comes from relying on one fuel source or trading partner,” Yellen said, which is why diversifying energy sources and suppliers is imperative. .
But it’s not just about energy. Together, Russia and Ukraine account for almost a third of world wheat exports.
“Russia’s invasion disrupted the flow of food for millions around the world and caused prices to spike,” the Treasury Secretary said.
Yellen said the Treasury would pressure multilateral development banks to speed up food aid to “vulnerable” countries.
Meanwhile, Yellen was suspicious in response to questions from lawmakers about a potential conflict between China and Taiwan and what a US response to it might look like.
“We are certainly concerned about Taiwan and will act appropriately,” she said.
— CNN’s Betsy Klein and Kevin Liptak contributed to this report.