G7 begins to press Russia on Ukraine with oil price cap

  • Russia has said it will not export oil subject to the cap
  • Zelensky says a price cap would do little to deter Russia
  • Ukrainian regions resort to scheduled blackouts
  • Ukrainian troops occupy positions on the front line -Zelensky
  • Russia says troops are conducting successful operation in Bakhmut

KYIV, Dec 5 (Reuters) – A Group of Seven (G7) price cap on Russian offshore oil took effect on Monday as the West sought to limit Moscow’s ability to finance its war in Ukraine, although Russia said it would not abide by it. A measure even if production has to be cut.

G7 nations and Australia agreed on Friday to cap the price of Russian offshore crude at $60 a barrel after European Union members overcame resistance from Poland. Russia is the world’s second largest oil exporter.

Ukrainian President Volodymyr Zelensky said the world had shown weakness by setting the cap at that level, Russian Deputy Prime Minister Alexander Novak said on Sunday, calling it a gross interference against the rules of free trade.

“We are working on procedures to ban the use of the price cap tool, at whatever level it is set, because such intervention could further destabilize the market,” said Novak, a Russian government official in charge of its oil, gas, nuclear energy. and coal.

“We will only sell oil and petroleum products to countries that work with us in market conditions even if we have to reduce production a bit,” he said.

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The G7 agreement allows Russian oil to be shipped to third-party countries using G7 and EU tankers, insurance companies and credit institutions, only if the cargo is purchased at $60 per barrel cap or less.

Industry players and a US official said in October that Russia could access enough tankers to move more of its oil beyond the cap’s reach, underscoring the limits of an even more ambitious plan to curb Russia’s wartime revenues.

According to Zelenskiy, the $60 cap will do little to deter Russia from waging war in Ukraine. “You don’t call it a serious decision to set such a limit for Russian prices, which is quite comfortable for the budget of the terrorist state.”

The United States and its allies have imposed sweeping sanctions on Russia since it invaded Ukraine on February 24 and sent billions of dollars in aid to the Ukrainian government.

However, French President Emmanuel Macron, who drew criticism from Ukraine and its Baltic allies at the weekend, suggested the West should consider the need for Russian security guarantees if it agrees to talks to end the war.

Zelensky’s aide, Mykhailo Podolyak, said the world needed security guarantees from Russia, not the other way around.

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Planned blackouts

In Ukraine, Russia has been pounding electricity infrastructure since early October, causing blackouts and leaving millions without heat as temperatures plummet.

Russia said the attacks did not target civilians and were intended to reduce Ukraine’s fighting capabilities.

Ukraine called the attacks a war crime.

Zelensky, in a video address on Sunday, urged citizens to be patient and strong in resisting the harshness of winter.

“To get through this winter, we need to be more resilient and more united than ever,” he said.

Kyiv Mayor Vitali Klitschko said in a telegram that starting Monday the grid would be limited to planned “stabilization” cutoffs to get it back to work, but added that the situation was “difficult.”

Ukraine’s largest electricity supplier, DTEK, said blackouts were planned for three other regions in Ukraine’s south and east: Odesa, Donetsk and Dnipropetrovsk.

In Kherson, largely without power since Russian forces abandoned the southern city last month, the regional governor said 85% of customers had electricity.

Shelling along front lines

On the battle front, Ukrainian troops are holding front-line positions, including near Bakhmut, which is considered Russia’s next target in their advance through Donetsk, Zelensky said.

Ukraine’s military said Russian forces were pressuring advanced tactical positions to advance in the directions of Bakhmut and Avdivka. About 16 settlements, including Bakhmut and Avdivka, were shelled by tanks, mortars, barrel and rocket artillery, the General Staff of the Armed Forces of Ukraine added.

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Ukraine’s military added that Russian forces were on the defensive along the Zaporizhia frontline while striking four settlements in the Donetsk region and six in the Zaporizhia region.

Russia’s Defense Ministry said its forces are conducting successful operations in the Bakhmut region and have pushed back a Ukrainian offensive in the direction of Donetsk.

Russia-based officials in occupied Donetsk said Ukraine had fired at least 10 Grad rockets into the city. There was no information about casualties.

In Kryvyi Rih, one of southern Ukraine’s largest cities, Russian rockets killed one person and wounded three after midnight, said Valentin Reznichenko, governor of the Dnipropetrovsk region.

“They are targeting the industrial sector,” Reznichenko said on the Telegram messaging app, without giving details.

Reuters could not independently verify the battlefield reports.

US intelligence chiefs said fighting in Ukraine was moving at a “slow pace” and militaries on both sides were looking to regroup and resupply to prepare for a counteroffensive later this winter.

Reporting by Nick Starkov and Reuters Bureau; Written by Himani Sarkar; Edited by Robert Birsel

Our criteria: Thomson Reuters Trust Principles.


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