Ukrainian President Volodymyr Zelenskyy welcomed the U.S.-brokered "energy ceasefire" but warned Monday that Kyiv would retaliate if Moscow failed to comply, as fresh Russian drone attacks targeted Ukraine's energy infrastructure just hours after President Donald Trump announced the agreement.
"If the Americans need it, we are ready to sign these guarantees to make sure they can be trusted, and it's important that we all see this situation in the same way," he said, addressing the Warsaw Security Forum via video link.
"All morning today, more and more Russian jet-powered shaheds have continued to enter our skies over Kyiv and other Ukrainian cities. We shoot down many of them, and if we didn't, there would clearly be even more damage to our energy infrastructure," he said.
"For now, this is Putin's answer to Trump."
He added: "If Russia does not agree to an energy crisis, we will respond."
It comes after Zelenskyy lamented Russia's continued drone attacks on Ukrainian energy targets on Sunday, including an attack on a power plant in Kharkiv in Eastern Ukraine close to the Russian border.
Overnight, Russia attacked state-owned Ukrainian energy company Naftogaz's gas production infrastructure in Kharkiv region, the company said. No one was injured in the strike by the jet-powered drone, which caused a fire at the facility, it added.
"Critical equipment was damaged in the attack," said Naftogaz's Acting CEO Sergii Fedorenko in a statement.
Earlier on Sunday, Trump announced an "energy ceasefire" to lower fuel costs ahead of the U.S. midterm elections.
"Effective immediately, there is an ENERGY CEASEFIRE in the War between Russia and Ukraine. Both parties have agreed. Do not break it!" Trump wrote on social media on Sunday.
The Kremlin said on Monday that contacts are ongoing on an energy ceasefire and that it would provide more information in due course, Reuters reported. It declined to comment on whether any deal would be limited to oil refineries. Russia's presidential office didn't immediately respond to a CNBC request for further information.
Since Russia's full-scale invasion of Ukraine in 2022, ceasefires have repeatedly proved fragile. Trump has tried several times to broker an end to the war, but none have succeeded so far.
"We've been here many times before over the last four and a half years, so I don't think we should build our hopes up too much," former IEA head of oil Neil Atkinson told "Squawk Box Europe" on Monday.
"The reality of it is that the volumes talked about are very small," said Atkinson, who is also a visiting fellow at the National Center for Energy Analytics. "The deal that's been agreed is not really market moving in any significant way."
According to Trump, Russia will supply more than 300,000 tons of diesel immediately, followed by 500,000 tons in November, and then another 4 million tons of diesel based on the condition of Russia's refineries.
EU top diplomat Kaja Kallas welcomed an energy ceasefire but said, "This is not the time to ease pressure on Russia."
"Suspending sanctions on Russian diesel provides Moscow with more revenues to wage war," she said in a statement Saturday.
EU's foreign ministers are due to meet in Luxembourg on Monday morning to discuss the Russia-Ukraine war, among other things. The EU will adopt nearly 1,600 new sanctions listings targeting Russia's military-industrial complex, in the single largest expansion of our sanctions list since Russia started its war, Kallas said ahead of the meeting.
Oil prices turned positive after Zelenskyy's Monday comments, after trading about 1.5% lower earlier in the session.
Brent crude futures with December delivery were up 1.24% to $106.02 a barrel at 8:15 a.m. ET, while West Texas Intermediate futures for November ticked 1.56% higher to $93.28 per barrel.
