An agreement by the G7, EU and Australia to cap the price paid for crude at $60 per barrel could lead to a reduction in Russian production by 500,000 barrels per day
Russian oil price cap extended to G7 and Australia
The G7 and Australia have agreed to cap the price paid for Russian seaborne crude at $60 per barrel, hours after EU members overcame internal resistance to reach the same decision earlier in the day.
The European Union agreed on a price after Poland threw in its support, paving the way for a formal agreement over the weekend.
In a statement, the Group of Seven and Australia's leading economies said the price cap would take effect on December 5 or soon after.
The price cap aims to reduce Russia's revenue from oil sales, while preventing a spike in global oil prices after the EU embargo on Russian crude took effect on December 5.
Poland has pushed in EU negotiations to keep the cap as low as possible to squeeze Russian revenues and limit Moscow's ability to finance its war in Ukraine.
The final agreement includes a mechanism to keep oil prices capped at least 5% below market prices.
US officials said the deal was unprecedented and demonstrated the determination of the coalition opposing Russia's war.
European Commission President Ursula von der Leyen said the price cap would significantly reduce Russia's revenues.
Here's a little more detail on the oil price cap set by the G7 and its allies.
The European Union has agreed to an embargo on seaborne crude from Russia in a package of sanctions announced earlier this year.
The G7 and Australia agreement will allow non-EU countries to continue importing Russian crude by sea using western insurance and maritime services as long as they do not pay more per barrel than the agreed limit.
Since the most important shipping and insurance companies are based in the G7 countries, the price cap will make it very difficult for Moscow to sell its oil at higher prices.
A senior US Treasury official told reporters on Friday that a $60 per barrel price cap on Russian seaborne crude would keep global markets well supplied while "institutionalizing" discounts created by the cap threat.
Under the terms of the deal, price caps will be reviewed in mid-January and every two months thereafter. It also includes a mechanism that will keep the price cap at least 5% below the market price.
Security experts from the CSIS thinktank have warned the $60 cap is toothless as it is above existing Russian oil prices of around $52 a barrel.
It is estimated that Russian oil sells at a profit of $40-$45 per barrel, but the true cost of Russian extraction is difficult to estimate.
Russia is investing heavy military efforts to capture the city of Donetsk, Britain says
The UK Ministry of Defense has released an update on Russia's military efforts in Ukraine.
Russian troops continue to invest the bulk of their overall firepower in the entrenched sector of the front line about 15 km long around the town of Bakhmut in Donetsk, the defense ministry said.
In recent days, the Russians have likely made little headway on the southern axis of this offensive and may be planning to lay siege to the city.
Russia has prioritized Bakhmut as its main offensive effort since early August 2022. Taking the city will have limited operational value although it could potentially allow Russia to threaten the larger urban areas of Kramatorsk and Sloviansk.
The statement from the ministry added that the campaign was disproportionately costly, compared to the possible gains.
There is a realistic possibility that Bakhmut's capture may have been a symbolic political goal for Russia.
Russian oil price cap extended to G7 and Australia
The G7 and Australia have agreed to cap the price paid for Russian seaborne crude at $60 per barrel, hours after EU members overcame internal resistance to reach the same decision earlier in the day.
The European Union agreed on a price after Poland threw in its support, paving the way for a formal agreement over the weekend.
In a statement, the Group of Seven and Australia's leading economies said the price cap would take effect on December 5 or soon after.
The price cap aims to reduce Russia's revenue from oil sales, while preventing a spike in global oil prices after the EU embargo on Russian crude took effect on December 5.
Poland has pushed in EU negotiations to keep the cap as low as possible to squeeze Russian revenues and limit Moscow's ability to finance its war in Ukraine.
The final agreement includes a mechanism to keep oil prices capped at least 5% below market prices.
US officials said the deal was unprecedented and demonstrated the determination of the coalition opposing Russia's war.
European Commission President Ursula von der Leyen said the price cap would significantly reduce Russia's revenues.
Welcome and summary
Hello and welcome to today's live coverage of the war in Ukraine. My name is Jonathan Yerushalmy and I will be with you for a while.
The G7, EU and Australia have agreed to cap the price of Russian seaborne crude at $60 per barrel, in a move that could see Russian production fall by 500,000 bpd by early 2023.
The decision by the Group of Seven countries and Australia follows earlier announcements from the EU that the bloc has overcome internal resistance to a price of $60 per barrel.
The G7 and Australia said in a statement that price caps would take effect on Dec. 5 or soon after.
More on this soon. In the meantime, here are other major recent developments:
US President, Joe Biden, said on Thursday that he is ready to talk to the Russian president, Vladimir Putin, if he seeks a way to end the war but Putin has not shown it. Putin is open to talks on a possible settlement in Ukraine but the United States' refusal to recognize the annexed territory as Russia is hindering the search for a potential compromise, the Kremlin said.
Up to 13,000 Ukrainian soldiers have died since Russia invaded in February, according to Kyiv presidential adviser Mykhailo Podolyak. At certain points in the war, Ukraine said that between 100 and 200 of its troops died each day on the battlefield, making Podolyak's estimate appear conservative. Speaking to the Ukrainian Channel 24, Podolyak said they were official figures from the Ukrainian general staff.
Three people were killed and seven others injured in Russian shelling in the Kherson region of southern Ukraine over the past 24 hours, the regional governor said.
Russian-installed authorities in Ukraine's southern Kherson region said they would begin evacuating some people with limited mobility from the Russian-occupied city of Kakhovka, on the east bank of the Dnieper River. The evacuation will start on Saturday, they said in a Telegram post on Friday.
Russian troops in Ukraine deliberately attacked the country's museums, libraries and other cultural institutions, according to a report issued by the international writers' organizations PEN US and Ukraine.
Finnish Prime Minister Sanna Marin called for Europe to build its own defense capabilities after the war in Ukraine, saying that without US help Europe was not resilient enough.
The International Atomic Energy Agency hopes to reach an agreement with Russia and Ukraine to create a protection zone at the Zaporizhzhia nuclear power plant by the end of this year, the head of the UN atomic watchdog was quoted as saying. The nuclear plant, the largest in Europe, provided about a fifth of Ukraine's electricity before the Russian invasion, and has been forced to run on backup generators several times, Reuters reports.
This article was written by EDUKASI CAMPUS.