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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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