Russia has retaliated against a price cap on its oil imposed by Western countries including Australia.

Moscow will ban oil sales to countries that abide by the price cap that was imposed on December 5, President Vladimir Putin decreed.

The price cap, unseen even in the times of the Cold War between the West and the Soviet Union, is aimed at crippling Moscow’s military efforts in Ukraine — without upsetting markets by actually blocking Russian supply.

Under the cap, oil traders who want to retain access to Western financing for such crucial aspects of global shipping as insurance must promise not to pay more than $US60 ($89) per barrel for Russian seaborne oil.

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

Australia joined the G7 in implementing a price cap on Russian oil on December 2.

Australia has already prohibited the import, purchase or transport of Russian oil, gas, refined petroleum products and coal since 25 April 2022.

The latest decree from Mr Putin, published on a government portal and the Kremlin website, was presented as a direct response to “actions that are unfriendly and contradictory to international law by the United States and foreign states and international organisations 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.

Mr Putin would have authority to overrule the measures in special cases.

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

Putin’s peace overtures

On the ground in eastern and southern Ukraine, Russian forces again shelled and bombed towns and cities on Tuesday.

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 trying to break Russian defence lines.

The Kremlin’s military campaign had set out to subdue Ukraine within days of a February invasion but its forces were defeated on the outskirts of Kyiv and later forced to flee other areas.

Mr Putin has 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 Russia’s military, a suspected Ukrainian drone reached the main base for Russia’s long-range strategic bomber fleet, hundreds of kilometres inside Russian air space, on Monday.

Moscow said it had shot the drone down but added at least three servicemen were killed.

Mr Putin has spoken of a desire for peace talks in comments in recent days.

However, his foreign minister Sergei Lavrov made clear Moscow still has a list of preconditions, including that Ukraine recognise Russia’s conquest by force of about one-fifth of Ukrainian territory.

Kyiv says it is winning the war and will never agree to relinquish land.

In a late night address on Tuesday, Mr 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,” he said.

“This will be a decisive year. We understand the risks of winter. We understand what needs to be done in the spring.”