Russia rejects $60 oil price cap, warns of response

Russia has rejected a $60 price cap on its oil set by Ukraine’s Western allies and warned of a response as President Volodymyr Zelenskyy said it was “quite comfortable” for Moscow amid a push from Kyiv for a lower cap.

Kremlin spokesman Dmitry Peskov said on Saturday that Russia would not accept the price ceiling, adding that it needed to analyse the situation before deciding on a specific response.

The EU, G7 and Australia on Saturday approved the $60 per barrel price cap on Russian seaborne oil. It will come into force on December 5.

“The G7 and all EU Member States have taken a decision that will hit Russia’s revenues even harder and reduce its ability to wage war in Ukraine,” EU Commission President Ursula von der Leyen said in a statement.

“It will also help us to stabilise global energy prices, benefitting countries across the world who are currently confronted with high oil prices,” she said.

But Russia’s permanent representative to international organisations 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.”

Al Jazeera’s Mohamed Vall, reporting from Moscow, said that Russia had been preparing for this decision in advance. “Russia knows that it has to use some alternative infrastructure to export its oil to the countries who will not accept to sign this decision,” Vall said.

Russia’s biggest oil buyers – China and India – have, however, not committed to the oil cap.

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 about $60 a barrel, a deep discount from international benchmark Brent, which closed Friday at $85.42 per barrel.

The EU will also stop any imports of Russian petroleum products from February 5. A G7 price cap on petroleum products will also be set at a later date, using exactly the same mechanism as for crude oil, the Commission said.

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.

Not ‘serious’

The Ukrainian president said that the $60 price cap is not “serious”.

“Russia has already caused huge losses to all countries of the world by deliberately destabilising the energy market,” he argued in his nightly address, describing the decision on the price cap as “a weak position”.

It is “only a matter of time when stronger tools will have to be used anyway”, Zelenskyy added. “It is a pity that this time will be lost.”

Kyiv said it had suggested a lower cap of $30 in order to “destroy the enemy’s economy faster”.

Speaking from Kyiv, Al Jazeera’s Rory Challands said that Ukraine has called for a lower price cap and has said the one adopted by the EU and the Group of Seven leading economies did not go far enough.

“Ukraine has been calling since the beginning of the Russian invasion for a complete embargo on all Russia’s energy products,” Challands said.

“A price cap on Russian seaborne oil, from the Ukrainian perspective – it doesn’t go far enough.”

Shelling continues

Meanwhile, the General Staff of the Ukrainian Armed Forces reported that since Friday Russia’s forces had fired five missiles, carried out 27 air raids 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.

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, Governor 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”.

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.

Article source: https://www.aljazeera.com/news/2022/12/3/russia-rejects-60-a-barrel-cap-on-its-oil-warns-of-cutoffs