Some of the advice here, like taking a belt sander to your walls, is a really bad idea. That is some beautiful paneling and redwood should only be oiled, never covered with a plastic sealer or other clear. You will ruin it with aggressive sanding and it will be crying time.
It needs a good clean/prep treatment and re-oiling. It will be beautiful. Hell, it's beautiful now. Experiment in an inconspicuous place with some mineral spirits maybe or other cleaning technique. If you do want to sand, I'd use a DA random orbital sander and
really weak paper, like maybe 180 or smoother. You would want to just barely scuff the surface, than re-oil.
Once again, that's beautiful paneling.
