Yellen: Russian Oil Price Cap Could Save African Countries $6bn Annually

Russia’s war in Ukraine is hitting Africans particularly hard by exacerbating food insecurity and putting an unnecessary drag on the continent’s economy, United States Treasury Secretary, Janet Yellen, has said.

Yellen noted that ending the war would be the best thing to help the global economy, but estimated that a group of seven-led price cap on Russian crude oil and refined products to limit Russia’s revenues could save the 17 largest net oil-importing African countries $6 billion annually.

Speaking at the start of a three-country visit to Africa, Yellen said some emerging market countries were saving even more by using the price cap to negotiate steeper discounts with Russia, and the Treasury was encouraging others to follow suit.

G7 countries and Australia implemented the oil price cap on December 5, banning the use of Western-supplied maritime insurance, finance and other services for cargoes priced above $60 per barrel.

A Reuters report stated that a further cap on Russian refined petroleum products, such as diesel and fuel oil, is due to take effect on February 5.

Yellen said the United States was working with African leaders to mitigate the damage caused by Russia’s “illegal and unprovoked war” in Ukraine, which along with COVID-19 had slowed growth and pushed millions of Africans into poverty and hunger.

Washington provided about $13 billion in emergency aid and food assistance last year, and was now setting up a US-Africa strategic partnership to address the short-term food needs of more than 300 million Africans, Yellen said.

The Secretary of the Treasury is the first of a number of top US officials who plan to visit Africa this year, including President Joe Biden, as Washington seeks to deepen ties with the continent and provide a counterweight to China, whose collateralised loans have left many nations deeply in debt.

“While our approach may be exacting, we believe it delivers lasting results. Countries need to be wary of shiny deals that may be opaque and ultimately fail to actually benefit the people they were purportedly designed to help in the first place.

“This can leave countries with a legacy of debt, diverted resources, and environmental destruction,” Yellen stated.