A key pillar of Russia’s wartime economy could soon be taking another hit

The US Treasury secretary, Janet Yellen, said the soft global oil market presented an opportunity to tighten sanctions against Russia.

On Wednesday, the Treasury secretary, Janet Yellen, signaled that the US was eyeing new restrictions on Russian energy exports, which have been a key revenue source for the Kremlin’s war chest.

“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 TV.

The global oil markets are weighed down by ample supply and demand concerns, in part because of China’s flagging economy. Analysts at Macquarie are forecasting a “heavy surplus” next year because of non-OPEC supply growth and “below-trend” demand growth.

International Brent crude-oil futures are down 4% year to date. US West Texas Intermediate futures are 1% lower over the same period.

“So the global oil market is softer, and that creates possibly an opportunity to take some further action,” Yellen said.

Yellen said that she wouldn’t preview any new sanctions but that the US would continue to put pressure on the Kremlin to end its war.

In response to the news about the potential new oil sanctions, Dmitry Peskov, a Kremlin spokesman, said on Wednesday that the outgoing Biden administration would leave a “difficult legacy” in US-Russia relations, according to the TASS state news agency.

The US has been tightening its noose on Russian energy revenues.

In November, the US sanctioned Gazprombank, the last major Russian financial institution exempt from such restrictions. The bank handles major international transactions, including those from the oil and gas sectors.

These developments mark a departure from the stance the US had maintained since the beginning of the war in Ukraine, when the Group of Seven and its allies imposed a price cap on Russian energy and restrictions on Russia’s access to Western insurance, brokerage, and maritime services.

The measures have allowed the global energy markets to continue functioning in an orderly fashion — which prevents price shocks and inflation — but still limit Russia’s oil revenue.

But since there’s ample oil supply globally amid a lull in demand, the risk of a spike in prices is lower even if Russian production is taken out of the market.

In light of the West’s sanctions against its energy sector, Russia has been selling most of its oil to India and China.

In November, Russia’s oil revenue fell 21% from a year ago amid weak energy prices, Bloomberg calculated using official data.