Thursday, August 18

Ukraine Latest: Attack Tests Grain Deal, Lavrov Slams Sanctions


Russia’s war in Ukraine enters its sixth month with Foreign Minister Sergei Lavrov decrying sanctions for limiting his country’s food exports even as its missile strike on the Black Sea port of Odesa ricocheted through grain markets.

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(Bloomberg) — Russia’s war in Ukraine enters its sixth month with Foreign Minister Sergei Lavrov decrying sanctions for limiting his country’s food exports even as its missile strike on the Black Sea port of Odesa ricocheted through grain markets.

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Russia’s attack on Saturday drew swift international condemnation, coming the day after it signed an agreement to allow the safe transit of Ukrainian grain exports blocked since the invasion. Wheat prices surged Monday on fears Moscow would not respect the deal. Kyiv still hopes to resume exports and has put out a call for ships.

Russian food exports aren’t sanctioned but have been hampered as private companies involved in the trade to minimize risks. Lavrov, who made his comments in Cairo at the start of an African tour, said he was counting on the UN to help resolve the issue. The war has disrupted major grain shipments, driving up global prices and prompting warnings over food insecurity.

(See RSAN on the Bloomberg Terminal for the Russian Sanctions Dashboard.)

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Key Developments

  • Russian Strike on Odesa Tests Day-Old Grain Export Deal
  • Russia Cuts Rates Below Pre-War Level in Surprise Jumbo Move
  • Ukraine Grain Challenge: Clear Mines, Find Ships and Trust Putin
  • Is Russia Letting Up on Energy? Don’t Trust Putin: Julian Lee

On the Ground

Russia’s war in Ukraine enters its sixth month with Ukraine’s forces bolstered by high-precision artillery systems provided by the US. Ukrainian troops repelled assaults on the Kramatorsk and Bakhmut axes in the eastern region of Dontesk, Ukraine’s General Staff said in a statement. Moscow is seeking to solidify its hold on the region and eventually hold referendums there and other parts of the southeast as a prelude to annexation. Russian forces struck the Dnipropetrovsk area overnight, damaging houses and agricultural hangars, local governor Valentyn Reznichenko said on Telegram. Russian forces also hit the Kharkiv and Sumy regions in the northeast of Ukraine.

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(All times CET)

UK Blocks Non-Essential Aid: FT (7:32 am)

Britain’s overseas aid program has been thrown into confusion after the Treasury blocked “non-essential” new payments for the rest of the summer over concerns that the cost of relief work in Ukraine will breach a spending cap, the Financial Times reported.

Last year, Boris Johnson’s government cuts its commitment to overseas aid to 0.5 percent of GDP due to the impact of Covid.

Treasury chief secretary Simon Clarke told the Foreign Office and other departments last week to suspend “non-essential aid spending” until a new prime minister was in place because the lower limit was about to be breached, according to the FT.

UK Treasury blocks ‘non-essential’ overseas aid payments

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Wheat Rises After Russia Hits Odesa (7:31 am)

Wheat prices jumped after Russia attacked the sea port of Odesa with missile cruises at the weekend, just hours after signing a deal to unblock grain exports from Ukraine.

Futures in Chicago surged as much as 4.6%, before paring gains to trade 3% higher at $7.82 a bushel by 11:20 am in Singapore. Prices slumped almost 6% on Friday to close at the lowest level since early February after the agreement was reached to allow shipments.

Millions of tons of grain are stuck in Ukraine after Russia’s invasion blocked its major ports. While a small volume has been rerouted by road and rail, customers in the Middle East and North Africa have had to look elsewhere, pushing up prices and worsening food insecurity .

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Asian Gas Surges on Russia Fears (7:31 am)

Asian natural gas prices are rallying on fears that Russia will slash supply again and worsen a global fuel shortage.

The North Asia liquefied natural gas benchmark jumped 12% Friday, and is trading near the highest level since Russia’s war in Ukraine upended the global market, according to data from S&P Global.

The natural gas market is on edge after Russia threatened to curb supply to Europe as soon as this week, only days after the restart of the crucial Nord Stream pipeline.

Russia Aims to Remove Ukraine ‘Regime,’ Lavrov Says (5:30 pm)

Foreign Minister Sergei Lavrov said Russia aims to remove what he called the “regime” in Ukraine, reiterating an ambitious goal that the Kremlin has periodically set for its invasion of its southern neighbor.

“The Russian and Ukrainian people will continue to live together,” Interfax quoted Lavrov as telling Arab League officials during a visit to Cairo Sunday. “We definitely will help the Ukrainian people rid themselves of the anti-people regime.”

With its military struggling to advance amid fierce Ukrainian resistance, Russia has sent mixed signals about its goals in its invasion. Lavrov last week said the Kremlin is seeking to take land beyond the Donbas regions it had initially sought to occupy, suggesting broader territorial ambitions.

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