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

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  • Gazprom says shutting down turbine will further reduce gas to Germany
  • Ukraine hopes to ship grain this week
  • Moscow dismisses fears the deal could be derailed

KYIV, July 25 (Reuters) – Russia will further cut gas supplies to Europe, dealing a blow to countries that have backed Kyiv, even amid hopes on Monday that grain exports blocked by Ukraine would resume this week.

Despite an airstrike last weekend, the first ships from Ukraine’s Black Sea ports could set sail within days under a deal reached on Friday, the United Nations said. This would help alleviate an international food crisis, even if mistrust and potential danger remained.

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

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On the front lines, the Ukrainian military reported widespread Russian artillery barrages in the east overnight and said troops from Moscow were preparing for a fresh assault on Bakhmut, a city in the industrial region of Donbass.

Russian President Vladimir Putin warned the West earlier this month that the sanctions risked triggering huge increases in global energy prices.

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

This is half of current flows, which already represent only 40% of normal capacity. Before the war, Europe imported about 40% of its gas and 30% of its oil from Russia. Read more

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

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

Ukrainian President Volodymyr Zelenskiy has warned that the Kremlin is waging an “open gas war” against a united Europe.

European politicians have repeatedly said that Russia could cut off gas this winter, a move that would plunge Germany into recession and send prices soaring for consumers already facing sky-high energy costs.

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

GRAIN VESSELS

Rising energy prices and a global shortage of wheat are among the most profound effects of Russia’s invasion of Ukraine, threatening millions of people in the poorest countries with starvation.

Prior to the invasion and subsequent sanctions, Russia and Ukraine accounted for almost a third of global wheat exports.

Russian, Turkish, Ukrainian and United Nations officials agreed on Friday that there would be no attacks on merchant ships crossing the Black Sea to Turkey’s Bosphorus Strait and to markets.

Moscow dismissed fears the deal could be derailed by a Russian missile strike on the Ukrainian port of Odessa on Saturday, saying it only targeted military infrastructure.

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

“We will also continue to actively explore other options with the international community to increase Ukrainian exports overland as well as options to help Ukrainian farmers temporarily store food,” he said.

Russia’s Black Sea Fleet has blocked grain exports from Ukraine since the February 24 invasion of Moscow.

Moscow denies any responsibility for the food crisis, accusing Western sanctions of slowing its food and fertilizer exports and Ukraine of having mined the approaches to its ports.

As part of Friday’s agreement, pilots will guide vessels along safe channels. Read more

A Ukrainian government official said he hoped the first shipment of grain 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 days.

Detailed procedures for the ships will be released soon, said UN deputy spokesman Farhan Haq. Read more

Russian Foreign Minister Sergei Lavrov, while touring African countries, said there were no obstacles to the export of grain and nothing in the agreement prevented Moscow from attack military infrastructure.

The Kremlin has also said the United Nations must ensure that restrictions on fertilizers and other Russian exports are lifted for the grain deal to work.

AIR STRIKES

The Kremlin says it is engaged in a “special military operation” to demilitarize and “denazify” Ukraine. Kyiv and Western nations say war is an act of unprovoked aggression.

Thousands of civilians died and millions fled during the war. Russian artillery barrages and airstrikes pulverized entire towns.

As Western weapons bolster the Ukrainians, Putin’s forces are making slow progress, but are believed to be preparing for a further push east.

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

Russia did not comment, but its defense ministry said its forces had destroyed an ammunition depot for HIMARS systems. Read more

Ukraine’s General Staff said in its evening report on Monday that Russian warplanes hit targets in Donetsk province, including near the Vuhlegirska thermal power plant.

Reuters could not independently verify either statement.

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Reports from Reuters offices; Written by Philippa Fletcher, Angus MacSwan and Costas Pitas; Editing by Gareth Jones, Barbara Lewis, Alison Williams and Cynthia Osterman

Our standards: The Thomson Reuters Trust Principles.


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