Russian President Vladimir Putin has threatened to halt contracts supplying Europe with gas unless the countries pay in rubles, a demand that several European countries rejected on March 31 as Russia continued shelling areas around Kyiv despite pledging to scale back operations in the north of the country.
Putin's ultimatum on gas supplies is due to take effect on April 1, the same day that new talks aimed at stopping the war were scheduled to be held.
European governments rejected Putin's demand but said they would study a mechanism that Putin put forth allowing customers to send foreign currency to a designated account at Russia's Gazprombank, which would then return rubles for the gas purchases.
"They must open ruble accounts in Russian banks. It is from these accounts that payments will be made for gas delivered starting from tomorrow," Putin said on March 31.
Russian President Vladimir Putin (file photo)
“If such payments are not made (in rubles), we will consider this a default on the part of buyers, with all the ensuing consequences...existing contracts will be stopped."
Several European governments say Putin's demand for ruble payments would be a breach of the contracts.
German Chancellor Olaf Scholz said the gas contracts stipulate payment mostly in euros and sometimes in dollars. He said he made clear to Putin in a phone call on March 30 “that it will stay that way.”
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As the gas payment issue headed for a showdown in Europe, U.S. President Joe Biden launched the largest release ever from the U.S. oil reserve to provide Americans some relief when filling up their tanks.
"This is a moment of consequence and peril for the world," Biden said at the White House as he announced the release of 1 million barrels of oil per day from the nation’s strategic petroleum reserve.
Oil prices tumbled after Biden made the announcement, which he said was aimed at fighting soaring gas prices sparked by Russia's invasion of Ukraine.
Britain's Ministry of Defense said on March 31 that Russian troops continue to hold positions to the east and west of Kyiv despite the withdrawal of a limited number of units and "heavy fighting will likely take place in the suburbs of the city in coming days."
Separately, a British intelligence chief said that demoralized Russian soldiers in Ukraine were refusing to carry out orders and sabotaging their own equipment and had accidentally shot down their own aircraft.
Jeremy Fleming, who heads the GCHQ electronic spy agency, made the remarks at a speech in the Australian capital, Canberra.
He added that Putin had apparently "massively misjudged" the invasion.
"It's clear he misjudged the resistance of the Ukrainian people. He underestimated the strength of the coalition his actions would galvanize. He underplayed the economic consequences of the sanctions regime, and he overestimated the abilities of his military to secure a rapid victory," Fleming said.
Peace talks set for April 1 were to resume by videoconference, according to Ukrainian negotiator David Arakhamia. But there was little confidence that they would lead to a cease-fire, particularly after the Russian attacks in zones where it had offered to scale back.
Russia raised hopes on March 28 when it announced plans to significantly scale back operations in areas around Kyiv and the northern city of Chernihiv to increase trust between the two sides at the negotiating table.
But Western leaders and Ukrainian President Volodymyr Zelenskiy said there had been indications the Kremlin only made the pledge to buy time while it regroups and resupplies its forces.
“We know what they are planning and what they are doing,” Zelenskiy said in an address to the nation late on March 31. “We know that they are moving away from the areas where we are beating them to focus on others that are very important.”
He told Ukrainians to brace for the battles yet to come.
“We still have to go through a very difficult path to get everything we want,” he said.
WATCH: Ukrainian forces recaptured the town of Trostyanets in eastern Ukraine, located just 40 kilometers from the border with Russia.
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Ukrainian Forces Recapture Eastern Town Near Russian Border
Zelenskiy said earlier that Ukraine is seeing “a buildup of Russian forces for new strikes on the Donbas, and we are preparing for that."
He also praised Ukrainian defenders who had resisted aerial bombardments and pushed armored columns back. Ukrainian forces have recaptured suburbs of the capital plus strategic towns and villages in the northeast and southwest.
Regional Governor Oleksandr Palviuk said there were Ukrainian counterattacks and some Russian withdrawals around the suburb of Brovary to the east of Kyiv on March 31.
Russian forces shelled Makariv, west of Kyiv, and the suburb of Irpin and there were battles around Hostomel, Pavliuk said. Chernihiv also came under attack, and Ukraine also reported Russian artillery barrages in and around the northeastern city of Kharkiv.
WATCH: Ukrainian forces have liberated the village of Kukhari outside Kyiv. But Russian forces have continued to bombard the village with artillery and aircraft.
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Russian Bombing Continues In Liberated Village Near Kyiv
The war has been particularly fierce in Mariupol, where tens of thousands have been trapped for weeks with little food, water, and other supplies.
The International Committee of the Red Cross (ICRC) on March 31 sent an aid convoy with medical supplies and other relief, and Ukraine dispatched 45 buses in hopes of evacuating some of the 100,000 people still in the city.
Russia's Defense Ministry said a humanitarian corridor would be opened on April 1 from 10 a.m. to allow civilians out of the city.
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'It's Hell': Ukrainians Describe Harrowing Escape From Besieged City Of Mariupol
On March 31, Zelenskiy told Australia's parliament that fresh and stronger sanctions against Russia were needed to step up the pressure on Moscow over its unprovoked invasion of Ukraine.
Zelenskiy warned in his video address that if Russia was not held responsible, then other states with "similar aspirations" will follow suit, threatening the rest of the world.
The Ukrainian president said that, if Russia had been punished for its annexation of Crimea in 2014 and the backing of separatists in eastern Ukraine, then the invasion might never have occurred.
"If the world had punished Russia in 2014 for what it did, there wouldn’t be this invasion in Ukraine in 2022," he said. "So the unpunished evil comes back."
Australian deputies applaud Ukrainian President Volodymyr Zelensky as he addresses the country's parliament via a videolink on March 31.
Zelenskiy accused Russia of "nuclear blackmail" and said more needs to be done to hold Moscow accountable.
The Australian government announced that it will provide a further $25 million in military support to Ukraine.
"The people of Australia stand with Ukraine in your fight for survival," Australian Prime Minister Scott Morrison told Zelenskiy. "Yes, you have our prayers, but you also have our weapons."
Australia has already supplied defense equipment and humanitarian aid to Ukraine, as well as imposing a ban on exports of alumina and aluminum ores, including bauxite, to Russia.
The additional support will bring Australia’s total military assistance for Ukraine so far to $116 million.
Australia has also imposed a total of 476 sanctions on 443 individuals, including businessmen close to Russian President Vladimir Putin, and 33 entities, including most of Russia's banking sector and all entities responsible for the country's sovereign debt.