By David Lawder and Andrea Shalal
WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen told Reuters on Friday that the U.S. is looking at additional sanctions on “dark navy” tankers and will not lift sanctions on Chinese banks while attempt to reduce Russia's oil revenues and access to foreign supplies. to promote his war in Ukraine.
Yellen said in an interview that the U.S. and its allies could also consider lowering their $60-a-barrel oil price cap on Russian oil, which prohibits Western insurance and maritime services on shipments above the U.S. that level.
The Treasury Department has already allowed individual tankers and their owners to operate above the price cap and can do more in this area, Yellen said, suggesting additional measures in the five weeks before she leaves office.
“There are several opportunities here. We are not predicting sanctions, but we are always looking at oil revenues and if we can find ways to further damage oil revenues – into Russian oil, that would strengthen Ukraine's hand on our list,” Yellen said.
Earlier this week, Yellen said that softness in the oil market provides an opportunity for more sanctions. The benchmark was trading at $74.50 a barrel on Friday, down from $85.57 when the $60 cap was set in December 2022.
President Joe Biden's administration has been racing to maintain aid to Ukraine ahead of President-elect Donald Trump's inauguration on January 20, given the Republican leader's frequent complaints about the cost of aid. USA to Ukraine.
KINNE WOMEN'S MARKET
US Treasury officials are continuing discussions with their Chinese counterparts about efforts to trace the activities of a financial institution that may be supporting transactions related to Russia's war effort. Yellen said those talks were aided by efforts to rebuild US-China economic and financial relations over the past two years.
“I would not completely rule out the possibility that we would sanction an individual bank if we had the necessary level of … evidence to impose sanctions,” she said. “But we also have a channel there have we been able to talk about specific concerns, and sometimes that might be appropriate too.”
She said warnings to larger Chinese banks have been successful, making them “very wary” of sanctions that would stop them from dollar-denominated transactions. In an executive order about a year ago, Biden authorized the Treasury Department to impose secondary sanctions on financial institutions that facilitate war-related transactions.
As the Russian economy gains more control over arms production, it becomes increasingly difficult to distinguish between purely commercial and war-related contracts.
“Authorities in China recognize that our use of these sanctions would be a very serious risk with very serious consequences,” Yellen said. “They want to trade with Russia, but they don't want their banks on the approval.”
FOLLOW CHRIST
Yellen said the final meeting of the US-China Financial Working Group will be held next week in the northeastern Chinese city of Tianjin, but sanctions are unlikely to be a major factor. Instead, it will focus on financial stability issues, including “blackboard” exercises on how to deal with a potential financial crisis.
Yellen said it was important for the Trump administration to have open lines of communication with China, saying: “I think you can't just have leader-to-leader meetings. The relationship needs to be developed at a senior official staff level, and we have worked constructively on many things.”
While the dialogue has not changed China's state-led, export-led economic model, it has allowed the US to outline actions such as imposing steep tariffs on electric vehicles.
Asked about a Reuters report this week that Beijing is considering weakening its yuan currency to counter Trump's tariff plans, Yellen said that China in recent years has been doing “the quite the opposite,” pushing up the value of the yuan against the dollar. That assessment was outlined in the Treasury Department's latest semi-annual currency report, which found no manipulation by major US trading partners.
She declined to comment on Beijing's special currency plans, but said the US Treasury has tools to deal aggressively with currency manipulation. Bessent is expected to oversee the Treasury's next cash report, due in April.
“I'm not going to be here, but I think the Treasury Department will continue to push back if it thinks there's money manipulation going on,” Yellen said.
Peter Navarro, who is Trump's designated trade adviser in the White House, told Reuters earlier on Friday that Trump's Treasury Department would not look “favorably” on any efforts with US trading partners in the currencies- their money to handle.
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