(Bloomberg) -- US Treasury Secretary Janet Yellen said that a softer global oil market might create an opportunity for further action against Russia’s energy sector, as the US continues its efforts to impair Moscow’s ability wage war against Ukraine.
“What’s unusual about this moment is that the oil market seems to be well supplied. Prices are relatively low, global demand is down and there really has been an increase in supply,” Yellen said in an interview with Bloomberg Television on Wednesday. “So the global oil market is softer and that creates possibly an opportunity to take some further action.”
The Biden administration’s sanctions regime on Russia has long been aimed at both restricting the revenue that Moscow gets while also avoiding a sharp constriction of global oil supplies that put upward pressure on prices at a time of elevated inflation.
The outgoing administration is now weighing new, harsher sanctions against Russia’s lucrative oil trade, people familiar with the matter have said. The aim is to tighten the squeeze on the Kremlin’s war machine just weeks before Donald Trump returns to the White House.
While Yellen said she wouldn’t preview any new steps, she stressed the US has been strengthening measures against Russia. “We have been focused since the outset on Russian oil revenue, it’s a critical component of the Russian budget and we’ve been looking for creative ways to try to reduce Russia’s revenue,” she said.
The US already bans imports of Russian oil but new restrictions on the exports of one of the world’s largest producers — which could involve singling out foreign buyers of its crude — would upend more than two years of policy set after Russia’s full-scale invasion of Ukraine began in February 2022.
Details of the possible new measures were still being worked out, but President Joe Biden’s team was considering restrictions that might target some Russian oil exports, people familiar with the matter told Bloomberg earlier this week.
In its final weeks, the Biden administration has also moved to step up military and financial support to Ukraine amid questions about Trump’s commitment to continued US aid.
On Tuesday, the Treasury disbursed a $20 billion loan to support Ukraine, which will be repaid using profits generated from immobilized Russian central bank assets. Disbursing the funds now largely shields the aid from any potential clawback effort by the incoming administration.
“I feel confident that this is something that can stay in place,” Yellen said Wednesday. “What we’re really trying to do is to strengthen Ukraine’s situation, it’s ability to defend itself and hopefully at some point to come to the table to bargain with Russia for a just peace.”
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