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Reuters
Reuters
Business
By Pavel Polityuk and Max Hunder

Russian gas cut to Europe hits economic hopes after Ukraine grain deal

FILE PHOTO: Pipes at the landfall facilities of the Nord Stream 1 gas pipeline are pictured in Lubmin, Germany, March 8, 2022. REUTERS/Hannibal Hanschke/File Photo

Russia will further cut gas supplies to Europe in a blow to countries that have supported Kyiv just as there was hope on Monday that Ukraine's blocked grain exports would resume this week.

Despite a weekend air strike, the first ships from Ukraine's Black Sea ports may set sail in days under a deal agreed on Friday, the United Nations said. This would help ease an international food crisis, although mistrust and potential danger remained.

Wheat field is seen in the village of Zhurivka, as Russia's attack on Ukraine continues, Ukraine July 23, 2022. REUTERS/Valentyn Ogirenko

Soaring energy costs and fears of famine in parts of the world show how the biggest conflict in Europe since World War Two, now in its sixth month and with no resolution in sight, is having an impact far from Ukraine.

On the frontlines, the Ukrainian military reported widespread Russian artillery barrages in the east overnight and said Moscow's troops were preparing for a new assault on Bakhmut, a city in the industrial Donbas region.

Russian President Vladimir Putin warned the West earlier this month that sanctions risked triggering huge global energy price rises.

FILE PHOTO: Firefighters work at a site of a Russian missile strike in a sea port of Odesa, as Russia's attack on Ukraine continues, Ukraine July 23, 2022. Press service of the Joint Forces of the South Defence/Handout via REUTERS

On Monday, Russian energy giant Gazprom, citing instructions from an industry watchdog, said gas flows to Germany through the Nord Stream 1 pipeline would fall to 33 million cubic metres per day from Wednesday.

That is half of the current flows, which are already only 40% of normal capacity. Prior to the war, Europe imported about 40% of its gas and 30% of its oil from Russia.

The Kremlin says the gas disruption is the result of maintenance issues and Western sanctions, while the European Union has accused Russia of resorting to energy blackmail.

Firefighters work at a site of a residential building damaged by a Russian military strike, as Russia's attack on Ukraine continues, in Mykolaiv region, Ukraine, in this handout picture released July 25, 2022. Press service of the State Emergency Service of Ukraine/Handout via REUTERS

Germany said it saw no technical reason for the latest reduction.

Ukrainian President Volodymyr Zelenskiy warned that the Kremlin was waging an "open gas war" against a united Europe.

Politicians in Europe have repeatedly said Russia could cut off gas this winter, a step that would thrust Germany into recession and lead to soaring prices for consumers already faced with painfully high energy costs.

Firefighters remove debris to find bodies of people at the Central House of Culture, after a military strike hit a building, as Russia's invasion of Ukraine continues, in Chuhuiv, in Kharkiv region Ukraine July 25, 2022. REUTERS/Nacho Doce

Moscow says it is not interested in a complete stoppage of gas supplies to Europe.

GRAIN SHIPS

Rising energy prices and a global wheat shortage are among the most far-reaching effects of Russia's invasion of Ukraine, threatening millions in poorer countries with hunger.

A man passes to a rescuer national Ukrainian clothes, from the House of Culture building destroyed by a Russian missile strike, as Russia's attack on Ukraine continues, in the town of Chuhuiv, Kharkiv region, Ukraine July 25, 2022. REUTERS/Sofiia Gatilova

Before the invasion and subsequent sanctions, Russia and Ukraine accounted for nearly a third of global wheat exports.

Officials from Russia, Turkey, Ukraine and the United Nations agreed on Friday there would be no attacks on merchant ships moving through the Black Sea to Turkey's Bosphorus Strait and on to markets.

Moscow brushed aside concerns the deal could be derailed by a Russian missile strike on Ukraine's port of Odesa on Saturday, saying it targeted only military infrastructure.

A woman walks in an elementary school that was hit by a military strike, as Russia's invasion of Ukraine continues, in Chuhuiv, in Kharkiv region Ukraine July 25, 2022. REUTERS/Nacho Doce

The White House said the strike cast doubt on Russia’s credibility and was watching closely to see if commitments would be fulfilled.

"We will also continue to actively explore other options with the international community to increase Ukraine exports through overland routes as well as options to help Ukrainian farmers temporarily store food," it said.

Russia's Black Sea fleet has blocked grain exports from Ukraine since Moscow's Feb. 24 invasion.

Firefighters remove debris to find bodies of people at the Central House of Culture, after a military strike hit a building, as Russia's invasion of Ukraine continues, in Chuhuiv, in Kharkiv region Ukraine July 25, 2022. REUTERS/Nacho Doce

Moscow denies responsibility for the food crisis, blaming Western sanctions for slowing its food and fertiliser exports and Ukraine for mining the approaches to its ports.

Under Friday's deal, pilots will guide ships along safe channels.

A Ukrainian government official said he hoped the first grain shipment from Ukraine could be made from Chornomorsk this week, with shipments from other ports within two weeks. The United Nations expects the first ship to move within a few days.

Firefighters work at a site of a residential building damaged by a Russian military strike, as Russia's attack on Ukraine continues, in Mykolaiv region, Ukraine, in this handout picture released July 25, 2022. Press service of the State Emergency Service of Ukraine/Handout via REUTERS

Detailed procedures for ships will be published in the near future, said deputy U.N. spokesperson Farhan Haq.

Russian Foreign Minister Sergei Lavrov, on a tour of African countries, said there were no barriers to the export of grain and nothing in the deal prevented Moscow from attacking military infrastructure.

The Kremlin also said the United Nations must ensure curbs on Russian fertiliser and other exports were lifted for the grain deal to work.

A rescuer passes to a man national Ukrainian clothes from the House of Culture building destroyed by a Russian missile strike, as Russia's attack on Ukraine continues, in the town of Chuhuiv, Kharkiv region, Ukraine July 25, 2022. REUTERS/Sofiia Gatilova

AIR STRIKES

The Kremlin says it is engaged in a "special military operation" to demilitarise and "denazify" Ukraine. Both Kyiv and Western nations say the war is an unprovoked act of aggression.

Thousands of civilians have died and millions have fled during the war. Russian artillery barrages and air strikes have pulverised whole cities.

FILE PHOTO: A Ukrainian serviceman stands on a burning wheat field near a frontline on a border between Zaporizhzhia and Donetsk regions, as Russia’s attack on Ukraine continues, Ukraine July 17, 2022. REUTERS/Dmytro Smolienko/File Photo

With Western weapons boosting the Ukrainians, Putin's forces are making slow progress but they are believed to be readying for a new push in the east.

Ukraine said on Monday its forces had used U.S-supplied HIMARS rocket systems to destroy 50 Russian ammunition depots since receiving the weapons last month.

Russia did not comment but its Defence Ministry said its forces had destroyed an ammunition depot for HIMARS systems.

Ukraine's General Staff said in its evening report on Monday that Russia war planes had struck at targets in Donetsk province, including near the Vuhlegirska thermal power station.

Reuters could not independently verify either statement.

(Reporting by Reuters bureaux; Writing by Philippa Fletcher, Angus MacSwan and Costas Pitas; Editing by Gareth Jones, Barbara Lewis, Alison Williams and Cynthia Osterman)

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