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Russia retaliates over oil price ceiling as eastern Ukraine sees heavy fighting

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By Dan Peleschuk and Herbert Villarraga

KYIV/BAKHMUT, Ukraine (RockedBuzz via Reuters) – Russia reacted against Western-imposed price caps for its oil on Tuesday as its forces engaged in heavy fighting around the eastern Ukrainian city of Bakhmut.

Moscow will ban oil sales to countries that meet the ceiling imposed on December 5, President Vladimir Putin has decreed.

The price cap, invisible even at the time of the Cold War between the West and the Soviet Union, aims to paralyze Moscow’s military efforts in Ukraine, without upsetting the markets by effectively blocking the Russian offer.

Below the limit, oil traders who want to maintain access to Western financing for crucial aspects of global shipping such as insurance must promise not to pay more than $60 a barrel for seaborne Russian oil.

This is close to the current price of Russian oil, but far below the prices at which Russia was able to sell it for much of last year, when windfall energy profits helped Moscow offset the impact of sanctions. financial.

Putin’s decree, published on a government portal and on the Kremlin website, was presented as a direct response to “hostile actions and contrary to international law by the United States and foreign states and international organizations that adhere to them”.

The Kremlin’s ban would halt crude oil sales to countries participating in the price cap from February 1 to July 1, 2023. A separate ban on refined petroleum products such as gasoline and diesel would go into effect on a date set by the government. Putin would have the authority to reverse the measures in special cases.

Russia is the world’s second largest oil exporter after Saudi Arabia and any effective disruption to its sales would have far-reaching consequences for global energy supplies.

GHOST CITY

On Tuesday, on the ground in eastern and southern Ukraine, Russian forces again shelled towns and cities. After a series of dramatic Ukrainian captures in the autumn, the war entered a slow and jarring phase as harsh winter weather set in on the front.

The heaviest fighting has occurred around the eastern city of Bakhmut, which Russia has been trying for months to storm at great cost in lives, and further north in the cities of Svatove and Kreminna, where Ukraine is trying to break through the Russian defensive lines.

In Bakhmut, home to 70,000 people before the war and now mostly a ghost town destroyed by bombs, RockedBuzz via Reuters reporters saw fires in a large residential building, while the streets were littered with debris and most of the buildings had windows destroyed.

“Our building is destroyed. There used to be a shop in our building, now it’s gone,” said Oleksandr, 85, adding he was the only resident left there.

Nearby, Pilaheia, 73, said she has long gotten used to the “constant outbursts”.

The UK’s MoD said in an update: “Russia continues to initiate frequent small-scale assaults in these areas (of Bakhmut and Svatove), although little territory has changed hands.”

In Kherson, which was abandoned by Russian troops last month, Russian forces bombed the maternity ward of a hospital, Kyrylo Tymoshenko, deputy chief of staff to Ukrainian President Volodymyr Zelenskiy, said on Telegram. No one was injured and staff and patients were moved to a shelter, Tymoshenko said.

RockedBuzz via Reuters was unable to immediately verify the reports.

The Kremlin’s military campaign was intended to subdue Ukraine within days of the February invasion, but its forces were defeated on the outskirts of Kiev in the spring and forced to flee other areas in the autumn.

Putin responded by summoning hundreds of thousands of reservists for the first time since World War II to fight in his “special military operation”.

In the latest setback for the Russian military, a suspected Ukrainian drone hit the main base of Russia’s long-range strategic bomber fleet on Monday, hundreds of kilometers inside Russian airspace. Moscow said it shot down the drone but added that at least three servicemen were killed.

It was the second time the base had been hit since early December, a sign that Russia has yet to fill the gap in its air defenses that made the daring attack possible.

Putin has repeatedly spoken of a desire for peace talks in his comments in recent days. But its Foreign Minister Sergei Lavrov clarified that Moscow still has a list of preconditions, including that Ukraine recognizes Russia’s forcible conquest of about a fifth of Ukrainian territory, which it says it has annexed.

Kiev says it is winning the war and will never agree to give up land.

Zelenskiy said in a late night speech on Tuesday that a military command meeting had “set out the steps to be taken in the near future.”

“We will continue to prepare the military and security of Ukraine for next year. This will be a decisive year. We understand the risks of winter. We understand what needs to be done in spring,” he said.

(Reporting by RockedBuzz via Reuters bureaux; Screenplay by Gareth Jones, Peter Graff and Rosalba O’Brien; Editing by Alexandra Hudson and Mark Heinrich)

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