G7 begins to press Russia on Ukraine with oil price cap

A man walks down a street of destroyed homes as Russia's invasion on Ukraine continues in Siversk, Ukraine, December 4, 2022. REUTERS/ Leah Millis

A Group of Seven (G7) price cap on Russian seaborne oil came into force on Monday as the West tries to limit Moscow’s ability to finance its war in Ukraine, though Russia has said it will not abide by the measure even if it has to cut production.

The G7 nations and Australia on Friday agreed a $60 per barrel price cap on Russian seaborne crude oil after European Union members overcame resistance from Poland which wanted it even lower. Russia is the world’s second-largest oil exporter.

Russian Deputy Prime Minister Alexander Novak called it a gross interference that contradicted the rules of free trade and would further destabilise the market.

“We will sell oil and petroleum products only to those countries that will work with us under market conditions, even if we have to reduce production a little,” Novak, the Russian government official in charge of its oil, gas, atomic energy and coal, said on Sunday.

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 bought at or below the $60 per barrel cap.

Industry players and a U.S. official said in October that Russia can access enough tankers to ship most of its oil beyond the reach of the cap, underscoring the limits of the most ambitious plan yet to curb Russia’s wartime revenue.

Ukrainian President Volodymyr Zelenskiy said $60 was too high to stop Russia waging war in Ukraine. “You wouldn’t call it a serious decision to set such a limit for Russian prices, which is quite comfortable for the budget of a terrorist state.”

The United States and its allies have imposed sweeping sanctions on Russia and sent billions of dollars in military aid to Ukraine since Russia invaded on Feb. 24.

French President Emmanuel Macron, however, drew criticism from Ukraine and its Baltic allies at the weekend for suggesting the West should consider Russia’s need for security guarantees if it agrees to talks to end the war.

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

In a further sign of Western unease at a standoff that has created energy and refugee crises in Europe, German Chancellor Olaf Scholz on Monday warned against creating a new Cold War by dividing the world into blocs.


Both sides reported casualties from attacks overnight, on an industrial enterprise and another location in southern Ukraine and on state-run accommodation in Russian-held territory in the east.

Three dormitories of the Donbass State Institute in the eastern Luhansk region were hit early on Monday by Ukrainian fire, killing nine people, the region’s Russian-installed governor and Russia’s state-run news agency TASS said.

Pro-Russian Governor Leonid Pasechnik said the dormitories were being used to house refugees and construction workers.

In Kryvyi Rih, among the largest cities in southern Ukraine, Russian rockets killed one person and wounded three just after midnight, the governor of the Dnipropetrovsk region, Valentyn Reznichenko, said.

“They aimed at an industrial enterprise,” Reznichenko said on the Telegram messaging app without giving details.

“It was a tragic night,” he said, while the Head of Kryvyi Rih Military Administration Oleksandr Vilkul said: “The destruction is very significant.”

In the southern Kherson region, where Ukraine has forced Russian forces to withdraw across the Dnipro River, governor Yaroslav Yanushevych said Russian shelling had killed two people in the past 24 hours.

Inside Russia, three people were killed and six injured on Monday after a fuel tanker exploded at a Russian airfield near the city of Ryazan, southeast of Moscow, the RIA Novosti news agency reported, without giving a cause.

Reuters could not independently verify the reports.

Zelenskiy said Ukrainian forces were holding positions along the front line, including near Bakhmut in the east, viewed as Russia’s next target in their advance through Donetsk region.

About 16 settlements, including Bakhmut and nearby Avdiivka, were shelled by tanks, mortars, barrel and rocket artillery, the General Staff of Ukraine’s armed forces said.

Russia’s defence ministry said its troops were conducting successful operations around Bakhmut and had pushed back Ukrainian attacks towards Donetsk city, where Russian-installed officials said Ukraine fired at least 10 Grad rockets. There was no word on casualties.

The head of U.S. intelligence said on Saturday that fighting in Ukraine was running at a “reduced tempo” as both sides prepare for planned military advances after the winter.


“To get through this winter, we must be even more resilient and even more united than ever,” Zelenskiy said in an overnight video address.

Russia has been pounding power infrastructure since early October, leaving millions without heating and light with temperatures now well below zero.

Russia says the assaults do not target civilians and are meant to reduce Ukraine’s ability to fight. Ukraine says the attacks are a war crime.

DTEK, Ukraine’s biggest private electricity producer, said the country was returning to scheduled power outages from Monday rather than the emergency blackouts it has suffered since a widespread Russian attack on Nov. 23.

Residents expressed relief.

“Power is dancing happily in the windows,” Yaroslava Antipina wrote on Twitter under a photograph of apartment blocks in Kyiv with their lights on.


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