Yellen warns European ban on Russian energy could harm economies

U.S. Treasury Secretary Janet Yellen warned on Thursday that a European ban on Russian oil and gas imports could harm the global economy.

Major European countries including Germany have faced calls to stop buying energy from Russia over its "special military operation" in Ukraine.

Speaking to reporters following a meeting with Ukrainian Prime Minister Denys Shmyhal and Finance Minister Sergiy Marchenko in Washington, Yellen said such a ban could ultimately cause more harm than good.

A European energy ban would "clearly" raise global oil prices and may inflict harm on Europe and other parts of the world, she said.

"It could actually have very little negative impact on Russia, because although Russia might export less, its price it gets for its exports would go up."

The European Union, which imports around 45 percent of its gas from Russia, is working on broadening its sanctions to include embargoes on oil and gas, but officials told AFP last week such measures would take "several months."

The International Monetary Fund (IMF) said this week that the Russia-Ukraine conflict will weigh heavily on economic growth in the eurozone, downgrading its forecast for this year to a 2.8 percent expansion from its previous 3.9 percent released in January.

Pierre-Olivier Gourinchas, the IMF's chief economist, said in an interview that the main risk to the outlook is an escalation of sanctions, in particular an embargo on Russian gas, which would cause a "quite severe" slowdown over the short term in countries like Germany.

If that were to happen, "we would have a fairly significant downward revision of the economic forecasts for the euro zone," he said.

(AFP)