Australia has signed up for a G7 move to starve Vladimir Putin’s war machine by refusing to pay more than $60 a barrel for Russian oil.

Australia joined the push shortly after the European Union reached unanimous agreement on the same price earlier in the day.

Friday’s move is a key step as Western sanctions aim to reorder the global oil market to prevent price spikes and starve President Vladimir Putin of funding for his war in Ukraine.

Europe needed to set the discounted price that other nations will pay by Monday, when an EU embargo on Russian oil shipped by sea and a ban on insurance for those supplies takes effect.

US Treasury Secretary Janet Yellen said the agreement would help nations taking part in the plan achieve the goal of restricting Putin’s “primary source of revenue for his illegal war in Ukraine while simultaneously preserving the stability of global energy supplies”.

“Today’s announcement is the culmination of months of effort by our coalition, and I commend the hard work of our partners in achieving this outcome,” she said.

The agreement comes after a last-minute flurry of negotiations.

Poland long held up an EU agreement, seeking to set the cap as low as possible. Following more than 24 hours of deliberations, when other EU nations had signaled they would back the deal, Warsaw finally relented late on Friday.

A joint G7 coalition statement on Friday said the group was “prepared to review and adjust the maximum price as appropriate”, taking into account market developments and potential impacts on coalition members and low and middle-income countries.

The US, G7 and the EU officials have signed off on an unprecedented scheme to impose a cap on Russia’s oil earnings. Photo: AAP

Meanwhile, Russia says demands it should pull out completely from Ukraine as part of any future talks to end the war effectively rule out any such negotiations as Russian strikes continue.

Kremlin spokesman Dmitry Peskov reiterated that Russian President Vladimir Putin remains open to talks but the demand from Ukraine and its allies that it first withdraws its troops from Ukraine is unacceptable.

Peskov’s comments came as Putin spoke on the phone on Friday morning with German Chancellor Olaf Scholz.

Scholz’s office said he made clear to Putin “that there must be a diplomatic solution as quickly as possible, which includes a withdrawal of Russian troops”.

On Thursday, US President Joe Biden also indicated he would be willing to talk with Putin if he demonstrated that he seriously wanted to end the invasion and pull out of Ukraine.

A statement issued by the Kremlin after the phone call with Scholz said Putin again blamed the US and its allies for encouraging Ukraine to prolong the war by supplying it with weapons.

Putin also said recent crippling Russian strikes on Ukraine’s infrastructure were “forced and inevitable” after Ukraine allegedly bombed a key bridge to the Crimean peninsula – which Russia seized from Ukraine in 2014 – and energy facilities.

Russian forces have been bombarding Ukraine’s critical infrastructure since October, leaving millions without electricity amid cold winter weather.

Scholz’s office said that in the phone conversation with Putin he “condemned in particular the Russian air attacks on civilian infrastructure” in Ukraine and said Germany was committed to continuing to help Ukraine defend itself.

Russian rocket attacks have targeted Ukraine’s power grid. Photo: AAP

Russian forces kept up rocket attacks on infrastructure and airstrikes against Ukrainian troop positions along the contact line, the Ukrainian general staff said on Friday, adding that the Russian military push has focused on a dozen towns including Bakhmut and Avdiivka.

Ukraine’s foreign minister told CNN in an exclusive interview that a series of letters containing explosives or animal parts are meant to terrorise Ukrainian diplomats around the world.

Dmytro Kuleba said that there had been 17 cases of embassies receiving either letter bombs, false bomb letters, or letters containing animals parts, like the eyes of cows and pigs.

CNN has been shown an image of one of the letters containing what officials said was the eyeball of a pig inside a padded envelope.

“It started with an explosion at the embassy of Ukraine in Spain,” he said.

“But what followed this explosion was more weird, and I would even say sick.”

Ukraine releases rare military casualty count

A top adviser to Ukrainian President Volodymyr Zelenskiy, citing military chiefs, said that since Russia invaded in February, 10,000 to 13,000 Ukrainian soldiers have been killed in action.

It was a rare comment on Ukraine’s military casualties and far below estimates from foreign leaders.

“We have official figures from the general staff, we have official figures from the top command and they amount to between 10,000 and 12,500-13,000 killed,” the adviser, Mykhailo Podolyak, said late on Thursday on Channel 24 TV.

He also said civilian casualties were “significant”.

Ukraine is being reduced to graves and rubble, but the will to resist remains. Photo: AAP

The Ukrainian military has not confirmed such figures and it was a rare instance of a Ukrainian official providing such a count.

The last dates back to August when the head of the armed forces said nearly 9000 military personnel had been killed.

In June, Podolyak said up to 200 soldiers were dying each day in some of the most intense fighting and bloodshed so far in the war.

On Wednesday, Ursula von der Leyen, the president of the European Union’s executive Commission, said 100,000 Ukrainian troops had been killed before her office corrected her comments – calling them inaccurate and saying that the figure referred to both dead and injured.