Efforts to degrade Russia's war machine have 'worked'

Country has been forced to turn to Iran and North Korea, US treasury secretary says

US Treasury Secretary Janet Yellen at a press conference at the International Monetary Fund in Washington. Bloomberg

International efforts to weaken Russia's war machine and its economy have "worked", forcing Moscow to turn to Iran and North Korea for material in its war against Ukraine, US Treasury Secretary Janet Yellen has said.

"Today at Treasury, we met with counterparts on efforts to degrade Russia's military-industrial complex. The world's swift and multilateral response against Russia's aggression has worked," Ms Yellen told a press conference at the International Monetary Fund in Washington.

"Russia has been forced to turn to suppliers of last resort, like Iran and North Korea for low-quality military equipment. We've also deeply weakened Russia's finances."

She said foreign investors had quit Russia "in droves" and said projections indicate contractions in the Russian economy for at least this year and next.

Ms Yellen also addressed a Biden administration plan to put a cap on the price of Russian oil.

The plan seeks to keep enough Russian supplies on the global market to stave off a spike in worldwide oil prices, but the proposal has been complicated since its inception and the subject of intense diplomacy with European allies.

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Ms Yellen said the exact dollar level of a price cap on Russian oil had not yet been determined, but insisted she had not suggested a price in the $60 per barrel range was being actively considered.

Some Biden administration officials are growing concerned that a plan to cap the price of oil purchased from Russia may backfire, people familiar with the matter told Bloomberg.

The plan seeks to keep enough Russian supplies on the global market to stave off a spike in worldwide oil prices, but the proposal has been complicated since its inception and the subject of intense diplomacy with European allies.

Its prospects have now been potentially undermined by the Opec+ move to cut production by 2 million barrels per day.

Nonetheless, the proposal is viewed as the best choice among bad options to curtail Russia’s oil revenues and financing for its war in Ukraine and is consequently moving forward.

But some officials are worried that the Opec+ production cut has increased volatility in markets, and a US-driven move to cap Russia’s oil prices could instead result in a spike.

- With additional reporting by Bloomberg