Roving Periscope: Russia retaliates against oil price-cap as war rages on in Ukraine
Virendra Pandit
New Delhi: As its ongoing war in Ukraine entered the 10th month, Russia retaliated on Tuesday against a price cap on its oil imposed by western countries, while its rather reluctant armed forces got involved in heavy fighting around the bombed-out ghost town of Bakhmut in eastern Ukraine, the media reported on Wednesday.
President Vladimir Putin ordered that Moscow has banned oil sales to countries that abide by the price cap imposed on December 5.
Under the price cap, oil traders seeking access to western financing for such crucial aspects of global crude shipping as insurance must promise not to pay above USD 60 per barrel for Russian seaborne oil.
This price is close to the current price for Russian oil, but far below the prices at which Russia sold it in 2022 when windfall energy profits helped Moscow offset the impact of financial sanctions imposed after Russia invaded Ukraine on February 24, 2022.
President Putin’s order, published on a government portal and the Kremlin website, was a direct response to “actions that are unfriendly and contradictory to international law by the United States and foreign states and international organizations joining them.”
The Kremlin 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 oil products such as gasoline and diesel would take effect on a date to be set by the government. Putin would have the authority to overrule the measures in special cases.
The price cap, not imposed even during the Cold War between the West and the then Soviet Union, is aimed at financially crippling Moscow’s military efforts in Ukraine, but without upsetting markets by actually blocking Russian supplies.
Despite the winter cold and logistics bottlenecks, intensified fighting on the frontline in eastern Ukraine continues, although neither side is making any major advances, said Britain’s Ministry of Defence and Ukraine military analysts.
Russia is the world’s second-largest oil exporter after Saudi Arabia, and any actual disruption to its sales could have far-reaching consequences for global energy supplies.
The media reported that, after several dramatic Ukrainian gains in the autumn, the war entered a slow, grinding phase during the bitter winter at the front.
The heaviest fighting has been around the eastern city of Bakhmut, which Russia has been trying for months to storm at a huge cost in lives, and further north in the cities of Svatove and Kreminna, where Ukraine is attempting to break Russian defensive lines.
In an update, Britain’s Ministry of Defence said: “Russia continues to initiate frequent small-scale assaults in these areas (of Bakhmut and Svatove), although little territory has changed hands.”
Ukrainian military analyst Oleh Zhdanov said that fighting had intensified with Russia deploying armored vehicles and tanks.
“There has been very little change in terms of the front line, but pressure from the enemy has intensified, both in terms of the numbers of men and the type and quantity of equipment,” Zhdanov said.
The Kremlin’s “special military operation” sought to subdue Ukraine within days of the February 24 invasion, but its forces were trapped or defeated on the outskirts of the capital Kyiv in the spring and forced to flee other areas in the autumn.
President Putin responded by attempting to push in nearly 300,000 unwilling reservists for the first time since Second World War. He also reiterated his desire for peace talks, but his foreign minister Sergei Lavrov listed out preconditions, including that Ukraine recognizes Russia’s conquest of nearly a fifth of eastern Ukrainian territory in September.
Ukraine rejected this condition with Kyiv saying it is winning the war and will never agree to relinquish land. In a late-night address on Tuesday, Ukrainian President Volodymyr Zelensky said a meeting of the military command had “established the steps to be taken in the near future.”
“We will continue preparing the armed forces and Ukraine’s security for next year. This will be a decisive year. We understand the risks of winter. We understand what needs to be done in the spring,” he added.
