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Russia Rejects $60-a-Barrel Cap on Oil 12/04 10:39
KYIV, Ukraine (AP) -- Russian authorities rejected a price cap on the
country's oil set by Ukraine's Western supporters and threatened Saturday to
stop supplying the nations that endorsed it.
Australia, Britain, Canada, Japan, the United States and the 27-nation
European Union agreed Friday to cap what they would pay for Russian oil at
$60-per-barrel. The limit is set to take effect Monday, along with an EU
embargo on Russian oil shipped by sea.
Kremlin spokesman Dmitry Peskov said Russia needed to analyze the situation
before deciding on a specific response but that it would not accept the price
ceiling. Russia's permanent representative to international organizations in
Vienna, Mikhail Ulyanov, warned that the cap's European backers would come to
rue 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, called
Saturday for a lower price cap, saying the one adopted by the EU and the Group
of Seven leading economies didn't go far enough.
"It would be necessary to lower it to $30 in order to destroy the enemy's
economy faster," Andriy Yermak, the head of Zelenskyy's office, wrote on
Telegram, staking out a position also favored by Poland -- a leading critic of
Russian President Vladimir Putin's war in Ukraine.
Under Friday's agreements, insurance companies and other firms needed to
ship oil would only be able to deal with Russian crude if the oil is priced at
or below the cap. Most insurers are located in the EU and the United Kingdom
and could be required to observe the ceiling.
Russia's crude has already been selling for around $60 a barrel, a deep
discount from international benchmark Brent, which closed Friday at $85.42 per
barrel.
The Russian Embassy in Washington insisted that Russian oil "will continue
to be in demand" and criticized the price limit as "reshaping the basic
principles of the functioning of free markets." A post on the embassy's
Telegram channel predicted the per-barrel cap would lead to "a widespread
increase in uncertainty and higher costs for consumers of raw materials."
"What happens in China will help shape whether the price cap has any teeth,"
said Jim Burkhard, an oil markets analyst with IHS Markit. He said dampened
demand from China means most Russian crude exports are already selling below
$60.
The price cap aims to put an economic squeeze on Russia and further crimp
its ability to finance a war that has killed an untold number of civilians and
fighters, driven millions of Ukrainians from their homes and weighed on the
world economy for more than nine months.
The General Staff of the Ukrainian Armed Forces reported that since Friday
Russia's forces had fired five missiles, carried out 27 airstrikes and launched
44 shelling attacks against Ukraine's military positions and civilian
infrastructure.
Kyrylo Tymoshenko, the deputy head of the president's office, said the
attacks killed one civilian and wounded four others in eastern Ukraine's
Donetsk region. According to the U.K. Defense Ministry, Russian forces
"continue to invest a large element of their overall military effort and
firepower" around the small Donestsk city of Bakhmut, which they have spent
weeks trying to capture.
In southern Ukraine's Kherson province, whose capital city of the same name
was liberated by Ukrainian forces three weeks ago following a Russian retreat,
Gov. Yaroslav Yanushkevich said evacuations of civilians stuck in Russian-held
territory across the Dnieper River would resume temporarily.
Russian forces pulled back to the river's eastern bank last month.
Yanushkevich said a ban on crossing the waterway would be lifted during
daylight hours for three days for Ukrainian citizens who "did not 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 Kherson city and nearby infrastructure in recent days,
leaving many residents without power. Running water remained unavailable in
much of the city -- and one resident was seen scooping up water from a dirty
puddle.
The city continued to suffer heavy shelling Saturday that left many
residents disoriented, toppled power lines and dumped torn-off tree branches on
the roads.
"When we start to repair (electricity networks), the shelling starts
immediately," said Oleksandr Kravchenko, who is in charge of high-voltage
networks in Kherson. "We just repair electric lines and on the next day we have
to repair lines again."
Ukrainian authorities also reported intense fighting in Luhansk and Russian
shelling of northeastern Ukraine's Kharkiv region, which Russia's soldiers
mostly withdrew from in September.
The mayor of the city of Kharkiv, which remained under Ukrainian control
during Russia's occupation of other parts of the region, said some 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 Saturday in Minsk with the
president and defense minister of Belarus, which hosts Russian troops and
artillery. Belarus has said its own forces are not taking part in the war, but
Ukrainian officials have frequently expressed concern that they could be be
induced to cross the border into northern Ukraine.
Belarusian President Alexander Lukashenko said at the meeting that his
troops and Russian forces train in coordination. "We ready ourselves as one
grouping, one army. Everyone knows it. We were not hiding it," he was quoted as
saying by the news agency Interfax.
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