Authors: David Lawder and Andrea Shalal

WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen told Reuters on Friday that the United States was considering further sanctions on “dark fleet” tankers and would not rule out sanctions on Chinese banks in a bid to reduce Russia’s oil revenues and access to foreign supplies to fuel the war. in Ukraine.

Yellen said in the interview that the United States and its allies could also consider lowering the $60-per-barrel price cap for Russian oil, which prohibits Western insurance and maritime services from providing cargoes above that level.

Treasury has already sanctioned individual tankers and their owners for operating above the price cap and could do more in this area, Yellen added, suggesting additional measures in the five weeks before she leaves office.

“There are many opportunities here. We do not anticipate sanctions, but we are always looking at oil revenues, and if we find ways to further reduce Russian oil revenues, I think that will strengthen Ukraine’s hand. That remains on our list,” Yellen said.

Earlier this week, Yellen said the softness in the oil market creates an opportunity for further sanctions. On Friday, the benchmark quoted was $74.50 per barrel, compared to $85.57 when the upper limit of $60 was set in December 2022.

President Joe Biden’s administration is racing to augment support for Ukraine before President-elect Donald Trump takes office on Jan. 20, given the GOP leader’s regular complaints about the cost of U.S. support for Ukraine.

CHINESE BANK CONCERNS

U.S. Treasury officials continue to hold talks with their Chinese counterparts about efforts to uncover financial institution activities that could aid transactions related to Russia’s war effort. Yellen said the talks were fueled by efforts to rebuild economic and financial communications between the U.S. and China over the past two years.

“I would absolutely not rule out the possibility of imposing sanctions on a specific bank if we had the necessary level of… evidence to be able to impose sanctions,” she said. “But we also have a channel where we could discuss specific issues, and sometimes that can be appropriate as well.”

She said warnings to larger Chinese banks have proven effective in making them “very wary” of sanctions that would cut them off from dollar transactions. About a year ago, in an executive order, Biden gave the Treasury Department authority to impose secondary sanctions on financial institutions that facilitate war-related transactions.

As Russia’s economy becomes increasingly dominated by military production, it is becoming increasingly complex to distinguish between strictly commercial and war-related contracts.

“The authorities in China realize that our application of these sanctions would pose a serious threat with very adverse consequences,” Yellen said. “They want to trade with Russia, but they don’t want their banks to be sanctioned.”

COMMUNICATION CHANNELS

Yellen said the final meeting of the U.S.-China Financial Working Group will be held next week in the northeastern Chinese city of Tianjin, but sanctions will likely not be a major topic. Instead, it will focus on financial stability issues, including practical exercises on how to deal with potential financial crises.

Yellen said it was essential for the Trump administration to have open channels of communication with China, adding: “I think you can’t just have meetings between leaders. Relationships need to be developed at senior official level and we have been working constructively on a number of things.”

While the dialogue did not change China’s state-led, export-oriented economic model, it did allow the United States to explain actions such as the application of high tariffs on electric vehicles.

Asked this week about a Reuters report that Beijing is considering weakening its currency, the yuan, to counter Trump’s tariff plans, Yellen said China has been doing “exactly the opposite” in recent years, increasing the value of the yuan against the dollar. This assessment was detailed in the Treasury Department’s latest semi-annual currency report, which found no evidence of manipulation by major U.S. trading partners.

She declined to comment on Beijing’s specific currency plans, but said the U.S. Treasury Department has the tools to respond decisively to currency manipulation. Bessent is expected to oversee the Treasury’s next currency report, due in April.

“I won’t be here, but my guess is that the Treasury Department will continue to protest if they believe currency manipulation has occurred,” Yellen said.

Peter Navarro, Trump’s designated White House trade adviser, also told Reuters on Friday that Trump’s Treasury would not “look favorably” on any attempts by U.S. trading partners to manipulate their currencies.