Kyiv, Ukraine (AP) – Russian authorities rejected a price cap on the country’s oil set by Ukraine’s western backers and threatened on Saturday to halt supplies to the nations that supported it.
Australia, Britain, Canada, Japan, the United States and the 27-nation European Union agreed on Friday to cap the price they would pay for Russian oil at $60 a barrel. The limit is due to come into effect on Monday, along with an EU embargo on Russian oil shipped by sea.
Kremlin spokesman Dmitry Peskov said Russia must analyze the situation before deciding on a concrete response, but that it will not accept the price cap. Russia’s permanent representative to international organizations in Vienna, Mikhail Ulyanov, warned that the cap’s European supporters would regret their decision.
“From this year Europe will live without Russian oil,” Ulyanov tweeted. “Moscow has already made it clear that it will not supply oil to those countries that support anti-market price caps. Wait, very soon the EU will accuse Russia of using oil as a weapon.”
The office of Ukrainian President Volodymyr Zelenskyy, meanwhile, on Saturday called for a lower price cap, saying the one agreed by the EU and the leading Group of Seven economies does not go far enough.
“It would be necessary to lower it to $30 in order to destroy the enemy’s economy more quickly,” Andriy Yermak, the head of Zelenskyi’s office, wrote on Telegram, staking a position also favored by Poland – a leading critic of Russian President Vladimir Putin’s war in Ukraine.
According to Friday’s agreements, insurance companies and other companies that need to ship oil would only be able to trade Russian crude if the price of oil is at or below the cap. Most insurers are based in the EU and UK and could be required to comply with the cap.
Russia’s crude has already been selling for around $60 a barrel, a significant discount to international benchmark Brent, which closed at $85.42 a barrel on Friday.
The Russian embassy in Washington insisted that Russian oil “will continue to be in demand” and has criticized the price cap as “reshaping the basic principles of free market functioning”. A post on the embassy’s Telegram channel predicted that the per-barrel cap would lead to “a widespread increase in uncertainty and higher costs for consumers of commodities.”
“What happens in China will help determine whether the price cap has teeth,” said Jim Burkhard, oil market analyst at IHS Markit. He said subdued demand from China means most Russian crude exports are already selling below $60.
The price cap aims to squeeze Russia economically and further limit its ability to finance a war that has killed untold numbers of civilians and combatants, driven millions of Ukrainians from their homes, and strained the global economy for more than nine months.
The General Staff of the Armed Forces of Ukraine reported that since Friday, Russian forces have fired five rockets, conducted 27 air strikes and launched 44 shell attacks on Ukraine’s military positions and civilian infrastructure.
Kyrylo Tymoshenko, deputy head of the president’s office, said one civilian was killed and four others wounded in the attacks in eastern Ukraine’s Donetsk region. According to the British Ministry of Defense “Russian forces continue to invest a large part of their total military effort and firepower” around the small town of Bakhmut in Donestsk, which they have been trying to capture for weeks.
In southern Ukraine’s Kherson province, whose eponymous capital was liberated by Ukrainian forces three weeks ago after a Russian withdrawal, Governor Yaroslav Yanushkevich said evacuations of civilians stuck in Russian-held territory across the Dnieper were temporarily resuming.
Russian troops retreated to the east bank of the river last month. Yanushkevich said a ban on crossing the waterway would be lifted for three days in daylight for Ukrainian citizens who “didn’t have time to leave the temporarily occupied territory.” His announcement cited a “possible intensification of hostilities in this area”.
Kherson is one of four regions that Putin illegally annexed in September and vowed to defend as Russian territory. From their new positions, Russian troops have regularly shelled the city of Kherson and nearby infrastructure in recent days, leaving many residents without power. Running water was unavailable in much of the city – and one resident was seen scooping up water from a dirty puddle.
The city continued to suffer from heavy shelling on Saturday, leaving many residents disoriented, downing power lines and throwing downed tree branches onto the streets.
“When we start repairing (power grids), the shelling starts immediately,” said Oleksandr Kravchenko, who is in charge of high-voltage grids in Kherson. “We only fix electrical wiring and the next day we have to fix wiring again.”
Ukrainian authorities also reported fierce fighting in Luhansk and Russian shelling of the Kharkiv region in north-eastern Ukraine, from which Russian soldiers largely withdrew in September.
The mayor of the city of Kharkiv, which remained under Ukrainian control during Russian occupation of other parts of the region, said about 500 apartment buildings were damaged beyond repair and nearly 220 schools and kindergartens were damaged or destroyed. He estimated the cost of the damage at $9 billion.
Russian Defense Minister Sergei Shoigu met the President and Defense Minister of Belarus, which hosts Russian troops and artillery, in Minsk on Saturday. Belarus has said its own forces are not taking part in the war, but Ukrainian officials have frequently expressed concern that they may be tricked into crossing the border into northern Ukraine.
Belarusian President Alexander Lukashenko said at the meeting that his troops and the Russian armed forces are training in a coordinated manner. “We are preparing as one group, one army. Everybody knows. We didn’t hide it,” he was quoted as saying by the Interfax news agency.
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Inna Varenytsia in Kherson, Ukraine, and Frank Bajak in Boston contributed to this report.
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