LAST UPDATE | 3 Dec 2022

A $60 PRICE cap set on Russian oil agreed by the EU, G7 and Australia is not “serious” because it is “quite comfortable” for Moscow, Ukrainian President Volodymyr Zelenskyy has said.

“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.

“The logic is obvious: if the price limit for Russian oil is $60 instead of, for example, $30, which Poland and the Baltic countries talked about, then the Russian budget will receive about a hundred billion dollars a year…

“This money will also be used to further destabilise precisely those countries that are now trying to avoid big decisions.”

Russia has denounced the move.

“We will not accept this price cap,” Kremlin spokesman Dmitry Peskov told domestic news agencies, adding that Russia, the world’s second-largest crude exporter, was “analysing” the move.

During the negotiations on where to set the price cap, Poland in particular tried to hold out for a lower level of $30, before finally agreeing last night to the higher ceiling.

Limit funds for the ‘war machine’
The market price of a barrel of Russian Urals crude is currently around $65 dollars, just slightly higher than the $60 cap, indicating the measure may have only a limited impact in the short term.

The G7 said it was delivering on its vow “to prevent Russia from profiting from its war of aggression against Ukraine, to support stability in global energy markets and to minimise negative economic spillovers of Russia’s war of aggression”.

The White House described the cap as “welcome news” that would help limit Putin’s ability to fund the Kremlin’s “war machine”.

Russia has threatened not to deliver to countries that adopted the measure.

The G7 and Australia said they were prepared to adjust the price ceiling if necessary.

Russia has earned €67 billion from the sale of oil to the European Union since the start of the war in February.

The EU embargo on seaborne deliveries follows a decision by Germany and Poland to stop taking Russian oil via pipeline by the end of 2022.

In all, more than 90 percent of Russian deliveries to the European Union will be affected, according to the bloc.

‘Endure’ power cuts
After suffering humiliating defeats during what has become the largest armed conflict in Europe since World War II, Russia began targeting Ukrainian energy infrastructure in October.

The strikes have caused sweeping blackouts, and cut off water supplies and heating to civilians at a time when the temperature in some regions has dropped to minus five degrees Celsius.

The authorities have introduced scheduled power cuts several times a day to keep essential infrastructure working.

The governor of the southern region of Mykolaiv, Vitaly Kim, has urged citizens to “endure” the electricity shortages.

Yesterday, Putin told Germany’s Chancellor Olaf Scholz the Russian strikes, which have destroyed close to half of the Ukrainian energy system, were an “inevitable response to Kyiv’s provocative attacks on Russia’s civilian infrastructure”.

He was referring in particular to the October attack on a bridge linking Moscow-annexed Crimea to the Russian mainland.

Scholz “urged the Russian president to come as quickly as possible to a diplomatic solution, including the withdrawal of Russian troops”, according to his spokesman.

But Putin accused the West of carrying out “destructive” policies in Ukraine, the Kremlin said, stressing that Western political and financial aid meant Kyiv “completely rejects the idea of any negotiations”.

Ukrainian President Volodymyr Zelensky has ruled out talks with Russia while Putin is in power after the Kremlin claimed to have annexed several Ukrainian regions.

Talks off the table
The Kremlin also indicated Moscow was in no mood for talks, after US President Joe Biden said he would be willing to sit down with Putin if the latter truly wanted to end the fighting.

“What did President Biden say in fact? He said that negotiations are possible only after Putin leaves Ukraine,” Peskov told reporters, adding Moscow was “certainly” not ready to accept those conditions.

The White House downplayed the idea too, saying Biden currently has “no intention” of holding talks with Putin.

Top US general Mark Milley last month said more than 100,000 Russian military personnel have been killed or wounded in Ukraine, with Kyiv’s forces likely suffering similar casualties.

© AFP 2022