HOUSTON, June 8 (Reuters) – Freeport LNG, operator of one of the largest U.S. export plants producing liquefied natural gas (LNG), will shut for at least three weeks following an explosion at its Texas Gulf Coast facility.
The fire roiled U.S. natural gas markets on Wednesday and the impact is likely to spread through Europe and Asia markets, analysts said.
Freeport LNG, which provides around 20% of U.S. LNG processing, disclosed the shutdown late on Wednesday after appraising damage to the massive facility.
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Its closure takes away a major supplier to markets already strained by European buyers shunning Russian LNG over its invasion of Ukraine – actions that Moscow calls a “special operation” – and by resurgent demand in China, analysts said.
“This is a significant production outage at a major U.S facility,” said Alex Munton, director of global gas and LNG at research firm Rapidan Energy. Freeport LNG ships about four cargoes per week and a three-week shutdown will take at least 1 million tonnes of LNG off the market, he said.
“It’s going to mean one thing: shortages. The competition for spot LNG is going to drive global LNG prices higher,” Munton said.
The plant can process up to 2.1 billion cubic feet of natural gas per day (bcfd), and at full capacity can export 15 million tonnes per annum (MTPA) of the liquid gas. U.S. LNG exports hit a record 9.7 bcfd last year, according to the U.S. Energy Information Administration (EIA).
In March, 21 cargoes loaded at the Freeport facility, carrying an estimated 64 billion cubic feet of gas to destinations in Europe, South Korea and China, according to the U.S. Department of Energy. That’s up from 15 cargoes in February and 19 in January.
U.S. natural gas futures sank following news of the explosion on concerns it could disrupt the plant’s demand for gas. They closed down about 6% at $8.699 per million British thermal units (mmBtu), having hit a near 14-year high of $9.664 mmBtu earlier in the day.
Freeport LNG was founded in 2002 by billionaire Michael Smith, and processes gas for companies including BP (BP.L), JERA, Kansai Electric (9503.T), Osaka Gas (9532.T), SK E&S and TotalEnergies . It is in the midst of expanding the plant’s capacity to 20 MTPA.
An investigation into what prompted the explosion was underway, a spokesperson for the company said, without elaborating on the cause of the fire.
A representative for the U.S. Coast Guard on Wednesday said a security zone had been set up two miles east and west of Freeport LNG’s facility, closing that portion of the intracoastal waterway to vessel traffic.
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Reporting by Liz Hampton in Denver, Sabrina Valle in Houston and Scott DiSavino in New York; Editing by Marguerita Choy, Richard Pullin, Chris Reese and Kenneth Maxwell
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WASHINGTON, June 7 (Reuters) – U.S. Treasury Secretary Janet Yellen told senators on Tuesday that she expected inflation to remain high and the Biden administration would likely increase the 4.7% inflation forecast for this year in its budget proposal.
During a Senate Finance Committee hearing, Yellen said that the United States was dealing with “unacceptable levels of inflation,” but that she hoped price hikes would soon begin to subside.
U.S. Consumer Price Index inflation has been tracking above 8% in recent months, the highest readings in over 40 years and well above President Joe Biden’s administration’s forecast for its fiscal 2023 budget.
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But another metric, the core Personal Consumption Expenditures price index excluding volatile food and energy costs, has begun to cool, edging down to 4.9% in April read more
“I do expect inflation to remain high although I very much hope that it will be coming down now,” she said.
Yellen repeatedly rejected Republican assertions that inflation was being fueled by Biden’s $1.9 trillion American Rescue Plan (ARP) COVID-19 spending legislation last year.
“We’re seeing high inflation in almost all of the developed countries around the world. And they have very different fiscal policies,” Yellen said. “So it can’t be the case that the bulk of the inflation that we’re experiencing reflects the impact of the ARP.”
– U.S. Treasury Secretary Janet Yellen is seated to testify before a Senate Finance Committee hearing on President Biden’s 2023 budget, on Capitol Hill in Washington, U.S., June 7, 2022. REUTERS/Evelyn Hockstein
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The Biden administration is still pushing for a scaled-back version of its stalled climate and social spending agenda, which would offer tax credits for clean energy technologies and reform prescription drug pricing – policies that Yellen argued would help lower expenses for American consumers weary of price hikes.
Yellen repeated her views that inflation was being fueled by high energy and food prices caused by Russia’s war in Ukraine, a shift to goods purchases during the pandemic, and by new COVID-19 variants and persistent supply chain disruptions.
‘TRANSITORY’ WRONG WORD
Yellen has come under fire from Republicans after acknowledging she was wrong last year in forecasting that inflation would be transitory and quickly subside. She will face more tough questions on the issue in a House Ways and Means Committee hearing on Wednesday. read more
Yellen added that both she and Federal Reserve Chair Jerome Powell both “probably could have used a better term than transitory” in describing inflation that they thought would fade quickly.
“When I said that inflation would be transitory, what I was not anticipating was a scenario in which we would end up contending with multiple variants of COVID that would be scrambling our economy and global supply chains, and I was not envisioning impacts on food and energy prices we’ve seen from Russia’s invasion of Ukraine,” Yellen said.
She testified as the World Bank on Tuesday warned of a heightened risk of “stagflation” – the 1970s mix of feeble growth and high inflation – returning as it slashed its global growth forecast by nearly a third to 2.9% for 2022. read more
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Reporting by David Lawder and Andrea Shalal;
Editing by Jonathan Oatis, Andrea Ricci and Howard Goller
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HOUSTON/WASHINGTON, June 5 (Reuters) – Italian oil company Eni SpA and Spain’s Repsol SA could begin shipping Venezuelan oil to Europe as soon as next month to make up for Russian crude, five people familiar with the matter said, resuming oil-for-debt swaps halted two years ago when Washington stepped up sanctions on Venezuela.
The volume of oil Eni and Repsol are expected to receive is not large, one of the people said, and any impact on global oil prices will be modest. But Washington’s greenlight to resume Venezuela’s long-frozen oil flows to Europe could provide a symbolic boost for Venezuelan President Nicolas Maduro.
The U.S. State Department gave the nod to the two companies to resume shipments in a letter, the people said. U.S. President Joe Biden’s administration hopes the Venezuelan crude can help Europe cut dependence on Russia and re-direct some of Venezuela’s cargoes from China. Coaxing Maduro into restarting political talks with Venezuela’s opposition is another aim, two of the people told Reuters.
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The two European energy companies, which have joint ventures with Venezuelan state-run oil company PDVSA, can count the crude cargoes toward unpaid debts and late dividends, the people said.
A key condition, one of the people said, was that the oil received “has to go to Europe. It cannot be resold elsewhere.”
Washington believes PDVSA will not benefit financially from these cash-free transactions, unlike Venezuela’s current oil sales to China, that person said. China has not signed onto Western sanctions on Russia, and has continued to buy Russian oil and gas despite U.S. appeals.
The authorizations came last month, but details and resale restrictions have not been reported previously.
Eni (ENI.MI)declined comment, citing a policy of not commenting “on issues of potential commercial sensitivity.” Repsol (REP.MC) did not reply to requests for comment.
OTHERS EXCLUDED
Washington has not made similar allowances for U.S. oil major Chevron Corp(CVX.N), India’s Oil and Natural Gas Corp Ltd (ONGC) (ONGC.NS) and France’s Maurel & Prom SA(MAUP.PA), which also lobbied the U.S. State Department and U.S. Treasury Department to take oil in return for billions of dollars in accumulated debts from Venezuela.
All five oil companies halted swapping oil for debt in mid-2020 in the midst of former U.S. President Donald Trump’s “maximum pressure” campaign that cut Venezuela’s oil exports but failed to oust Maduro.
PDVSA has not scheduled Eni and Repsol to take any cargoes this month, according to a June 3 preliminary PDVSA loading program seen by Reuters.
Venezuela Vice President Delcy Rodriguez tweeted last month she hoped the U.S. overtures “will pave the way for the total lifting of the illegal sanctions which affect our entire people.”
OUTREACH TO CARACAS
The Biden administration held its highest level talks with Caracas in March, and Venezuela freed two of at least 10 jailed U.S. citizens and promised to resume election talks with the opposition. Maduro has yet to agree on a date to return to the negotiating table. read more
Republican lawmakers and some of Biden’s fellow Democrats who oppose any softening of U.S. policy toward Maduro have blasted the U.S. approach to Venezuela as too one-sided.
Washington maintains further sanctions relief on Venezuela will be conditioned on progress toward democratic change as Maduro negotiates with the opposition.
Last month, the Biden administration authorized Chevron, the largest U.S. oil company still operating in Venezuela, to talk to Maduro’s government and PDVSA about future operations in Venezuela. read more
About that time, the U.S. State Department secretly sent letters to Eni and Repsol saying Washington would “not object” if they resumed oil-for-debt deals and brought the oil to Europe, one of the sources told Reuters.
The letters assured them they would face no penalties for taking Venezuelan oil cargoes to collect on pending debt, said two people in Washington.
CHEVON CONSIDERATION
Chevron’s request to the U.S. Treasury to expand its operations in Venezuela came as the State Department issued the no-objection letters to Eni and Repsol. The person familiar with the matter in Washington declined to say whether Chevron’s request remained under consideration.
The U.S. oil major did receive a six-month continuation of a license that preserves its assets and U.S. approval to talk with Venezuelan government officials about future operations. read more
It was not immediately clear if Washington had okayed the prior crude-for-fuel swaps European companies conducted with PDVSA until 2020, exchanges that provided relief to gasoline-thirsty Venezuela.
China has become the largest customer for Venezuelan oil, with as much as 70% of monthly shipments destined for its refiners. read more
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Reporting by Marianna Parraga in Houston and Matt Spetalnick in Washington; writing by Gary McWilliams; Editing by David Gregorio and Lisa Shumaker
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The logo of the Organization of the Petroleoum Exporting Countries (OPEC) is seen at OPEC’s headquarters in Vienna, Austria June 19, 2018. REUTERS/Leonhard Foeger/File Photo
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Western sanctions have driven down Russian production
OPEC+ meets Thursday, may address Russian output issue
U.S. diplomats have been working on Biden’s Saudi visit
Biden faces inflation at 40-year high, low ratings
DUBAI/LONDON/RIYADH, June 2 (Reuters) – Saudi Arabia and other OPEC states may boost oil production to offset a drop in Russian output, a move that could ease sky-high oil prices and surging inflation and may also pave the way for an ice-breaking visit to Riyadh by U.S. President Joe Biden.
Two OPEC+ sources said the group was working on making up for a drop in Russian oil output as Russia’s production has fallen by about 1 million barrels per day (bpd) as a result of Western sanctions on Moscow over its invasion of Ukraine.
Sources said OPEC+ may speed up output increases to 650,000 bpd a month in July and August, up from the initial plan to raise output by 432,000 bpd a month in July, August and September.
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Oil fell $1 to about $115 a barrel on news of the possible OPEC output boost, but it was still near a more than decade high after a spike this year close to an all-time peak of $147.
One OPEC+ source familiar with the Russian position said Moscow could agree to other producers raising production to compensate for Russia’s lower output, although not necessarily making up all the shortfall.
“Ultimately, the compensation could be agreed,” the source said, but added that a decision might not be taken at Thursday’s meeting of OPEC+, an alliance of the Organization of the Petroleum Exporting Countries, Russia and others.
However, a Gulf source in OPEC+ said a decision on the matter was “highly possible” at Thursday’s ministerial meeting.
U.S. diplomats have been working for weeks on organising Biden’s first visit to Riyadh after two years of strained relations because of disagreements over human rights, the war in Yemen and U.S. weapons supplies to the kingdom.
U.S. intelligence has accused Saudi Crown Prince Mohammed bin Salman, known as MbS, of approving the 2018 killing of Saudi journalist Jamal Khashoggi, a charge the prince denies.
Saudi Arabia and its neighbour the United Arab Emirates have been frustrated at the Biden administration’s opposition to their military campaign in Yemen and failure to address Gulf concerns about Iran’s missile programme and its regional proxies.
With the Ukraine war adding to a tight crude market, the U.S. administration has sought more supplies from Gulf allies such as Saudi Arabia, as well as from Iran whose output has been restricted by U.S. sanctions that could be lifted if a nuclear deal is reached, and Venezuela, also under U.S. sanctions.
APPROVAL RATINGS
Rocketing gasoline prices has driven U.S. inflation to a 40-year high, hitting Biden’s approval ratings as he approaches mid-term elections. Biden, meanwhile, has refused so far to deal with MbS as Saudi Arabia’s de-facto ruler.
A source briefed on the matter said Washington wanted clarity on oil output plans before a potential Biden visit for a summit with Gulf Arab leaders, including MbS, in Riyadh. read more
A second source familiar with discussions about Biden’s visit said the issue was not only tied to oil production, but also to Gulf security issues and human rights. The source said both Riyadh and Washington had been showing more readiness to listen to the other’s concerns.
OPEC+ ministers, who started online talks on Thursday after 1210 GMT, had been widely expected to stick to an existing plan for a regular monthly increase of 432,000 bpd until September, when the deal expires.
However, OPEC+ sources said the discussion was now focusing on raising output by 650,000 bpd in July and August without saying whether any increase was planned for September.
Western sanctions could reduce production from Russia, the world’s second largest oil exporter, by as much as 2 million to 3 million bpd, according to a range of industry estimates.
Russia was already producing below its OPEC+ target of 10.44 million bpd in April with output running at about 9.3 million.
A Western diplomat said Russia might be ready to agree to other members of OPEC+ to fill a gap in its output in order to preserve unity in the group and maintain support from the Gulf, which has tended to take a neutral stance over the Ukraine war.
OPEC+ agreed to slash output by a record amount in 2020 when the pandemic hammered demand. By September, when the deal expires, the group will have limited spare capacity to lift output further.
Saudi Arabia is now producing 10.5 million bpd and has rarely tested sustained production levels above 11 million bpd. Riyadh says it is working on boosting its nameplate capacity to 13.4 million bpd from the current 12.4 million by 2027.
The only other OPEC state with significant ability to produce more oil is the UAE, although OPEC is estimated to have less than 2 million bpd of spare capacity in total.
“There is not much spare oil in the market to replace potential lost barrels from Russia,” said Bjarne Schieldrop, chief commodities analyst at SEB bank.
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Reporting by Alex Lawler, Rowena Edwards, Ahmad Ghaddar, Aziz El Yaakoubi in Riyadh and Andrew Mills in Doha; Writing by Dmitry Zhdannikov and Ghaida Ghantous; Editing by Jason Neely and Edmund Blair
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Russian forces advance slowly on Sievierodonetsk city centre
Thousands of civilians trapped in Sievierodonetsk
EU resolves impasse over Russian oil ban
KYIV, May 31 (Reuters) – Ukrainian forces were holding out in Sievierodonetsk on Tuesday, resisting Russia’s all-out assault to capture a bombed-out wasteland that Moscow has made the principal objective of its invasion in recent days.
Both sides said Russian forces now controlled between a third and half of the city. Russia’s separatist proxies acknowledged that capturing it was taking longer than hoped, despite one of the biggest ground assaults of the war.
Western military analysts say Moscow has drained manpower and firepower from across the rest of the front to concentrate on Sievierodonetsk, hoping a massive offensive on the small industrial city will achieve one of its stated aims, to secure surrounding Luhansk province for separatist proxies.
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“We can say already that a third of Sievierodonetsk is already under our control,” Russia’s TASS state news agency quoted Leonid Pasechnik, the leader of the pro-Moscow Luhansk People’s Republic, as saying.
Fighting was raging in the city, but Russian forces were not advancing as rapidly as might have been hoped, he said, claiming that pro-Moscow forces wanted to “maintain the city’s infrastructure” and moving slowly because of caution around chemical factories.
The Ukrainian head of the city administration, Oleksandr Stryuk, said the Russians now controlled half of the city.
“Unfortunately … the city has been split in half. But at the same time the city still defends itself. It is still Ukrainian,” he said, advising those still trapped inside to stay in cellars.
Ukraine says Russia has destroyed all of the city’s critical infrastructure with unrelenting bombardment, followed by wave after wave of mass ground assault involving huge numbers of casualties.
Thousands of residents remain trapped. Russian forces are advancing towards the city centre, but slowly, regional governor Serhiy Gaidai said.
Gaidai said there did not appear to be a risk of Ukrainian forces being encircled, though they could ultimately be forced to retreat across the Siverskiy Donets river to Lysychansk, the twin city on the opposite bank.
Stryuk, head of the city administration, said evacuating civilians was no longer possible. Authorities cancelled efforts to evacuate residents after shrapnel killed a French journalist on Monday.
Jan Egeland, secretary general of the Norwegian Refugee Council aid agency which had long operated out of Sievierodonetsk, said he was “horrified” by its destruction.
“We fear that up to 12,000 civilians remain caught in crossfire in the city, without sufficient access to water, food, medicine or electricity. The near-constant bombardment is forcing civilians to seek refuge in bomb shelters and basements, with only few precious opportunities for those trying to escape.”
Elsewhere on the battlefield, there were few reports of major shifts. In the east, Ukraine says Moscow is trying to assault other areas along the main front, regrouping to press towards the city of Solviansk. In the south, Ukraine claimed in recent days to have pushed back Russian forces on a bank of the Inhulets River, a border of Russian-held Kherson province.
A local resident walks next to a building destroyed by a Russian military strike, as Russia’s attack on Ukraine continues, in the town of Bakhmut, in Donetsk Region, Ukraine May 29, 2022. REUTERS/Serhii Nuzhnenko
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OIL BAN
After having failed to capture Kyiv, been driven out of northern Ukraine and made only limited progress elsewhere in the east, Moscow has concentrated its might on Sievierodonetsk, which had a pre-war population of around 110,000.
Victory there and across the river in Lysychansk would bring full control of Luhansk, one of two eastern province Moscow claims on behalf of separatist proxies.
But the huge battle has come at a massive cost, which some Western military experts say could hurt Russia’s ability to fend off counterattacks.
“Putin is now hurling men and munitions” at Sievierodonetsk, “as if taking it would win the war for the Kremlin. He is wrong,” the Washington-based Institute for the Study of War think tank wrote this week.
“When the Battle of Severodonetsk ends, regardless of which side holds the city, the Russian offensive at the operational and strategic levels will likely have culminated, giving Ukraine the chance to restart its operational-level counteroffensives to push Russian forces back.”
Overnight, the EU agreed its toughest sanctions against Russia since the war began, for the first time targeting Russian sales of energy, Moscow’s main source of income.
The EU will now ban import of Russian oil by sea. Officials said that would halt two-thirds of Russia’s oil exports to Europe at first, and 90% by the end of this year as Germany and Poland also phase out imports by pipeline. read more
But Hungary, which relies on Russian oil through a huge Soviet-era pipeline, secured an exemption. read more
Ukraine says the sanctions are taking too long and are still too full of holes to stop Russia: “If you ask me, I would say far too slow, far too late and definitely not enough,” said Ihor Zhovkva, deputy head of President Volodymyr Zelenskiy’s office.
Nevertheless, the foreign ministry welcomed the new EU package and said the oil restrictions would cost Moscow of tens of billions of dollars.
Moscow, meanwhile, has switched off gas supplies to several EU countries in a dispute over how to receive payments, although the moves so far, during warm months when demand is lower, have yet to have the severest impact. On Tuesday, Russia switched off the main Dutch gas buyer, GasTerra, which said it would find supplies elsewhere. read more
Putin launched his invasion of Ukraine in February claiming Moscow aimed to disarm and “denazify” its neighbour. Ukraine and its Western allies call this a baseless pretext for a war to seize territory.
Ukraine accuses Moscow of war crimes on a huge scale, flattening cities with artillery, and killing and raping civilians in areas it occupied. Russia denies targeting civilians and says accusations have been faked.
In the second war crimes trial to be held in Ukraine, two Russian soldiers were sentenced on Tuesday to 11 1/2 years prison after pleading guilty to shelling civilian targets. Ukraine’s top prosecutor said Kyiv has identified more than 600 Russian war crime suspects and started prosecuting around 80.
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Reporting by Reuters bureaux; Writing by Simon Cameron-Moore and Peter Graff; Editing by Stephen Coates and Alison Williams
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European Union flags flutter outside the EU Commission headquarters in Brussels, Belgium, January 18, 2018. REUTERS/Francois Lenoir/File Photo
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BRUSSELS, May 30 (Reuters) – Top European Union diplomats meet on Monday for a last-ditch attempt to agree on Russian oil import sanctions before their leaders meet later in the day, seeking to avoid a spectacle of disunity over the bloc’s response to the war in Ukraine.
EU foreign policy chief Josep Borrell sounded a hopeful note ahead of the two-day summit in Brussels, where leaders of the 27 countries will have few concrete results if the impasse over an oil embargo holds up a wider package of sanctions on the table.
“I think that this afternoon, we will be able to offer to the heads of the member states an agreement,” Borrell told broadcaster France Info.
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Ambassadors failed on Sunday to agree on a proposal that would ban Russian oil delivered to EU countries by sea by the end of this year, but exempt oil delivered by a pipeline that supplies landlocked Hungary, Slovakia and the Czech Republic.
The EU leaders will declare continued support for Ukraine to help it fend off Russia’s assault and they will discuss how to deal with the impact of the conflict, especially the spike in energy prices and an impending food supply crisis.
However, the talks will be overshadowed by their month-long struggle to agree on a sixth round of sanctions against Moscow.
“After Russia’s attack on Ukraine, we saw what can happen when Europe stands united,” German Economy Minister Robert Habeck said on Sunday. “With a view to the summit tomorrow, let’s hope it continues like this. But it is already starting to crumble and crumble again.” read more
Other elements of the latest package of sanctions include cutting Russia’s biggest bank, Sberbank (SBMX.MM), from the SWIFT messaging system, banning Russian broadcasters from the EU and adding more people to a list whose assets are frozen.
The most tangible outcome of the summit will be agreement on a package of EU loans worth 9 billion euro ($9.7 billion), with a small grants component to cover part of the interest, for Ukraine to keep its government going and pay wages for about two months.
A decision on how to raise the money will be made later.
According to a draft of the summit conclusions seen by Reuters, leaders will also back the creation of an international fund to rebuild Ukraine after the war, with details to be decided later, and will touch on the legally fraught question of confiscating frozen Russian assets for that purpose.
The leaders will pledge to accelerate work to help Ukraine move its grain out of the country to global buyers via rail and truck as the Russian navy is blocking the usual sea routes and to take steps to faster become independent of Russian energy.
The draft showed leaders would explore ways to curb rising energy prices, including the feasibility of introducing temporary price caps, to cut red tape on rolling out renewable sources of energy and invest in connecting national energy networks across borders to better help each other.
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Editing by Edmund Blair
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Biden calls for territorial integrity and sovereignty
EU embargo on Russian oil imports “within days”-Germany
Russia sees economic ties with China growing
Ukraine urges prisoner swap with Moscow
LVIV, Ukraine/BERLIN, May 24 (Reuters) – U.S. President Joe Biden said on Tuesday that the crisis in Ukraine was a global issue which heightened the importance of maintaining international order, territorial integrity and sovereignty.
Biden’s comments delivered at the opening of the “Quad” meeting of Indo-Pacific leaders in Tokyo come a day after he broke with convention and volunteered U.S. military support for Taiwan, the self-governed island claimed by China. read more
“This is more than just a European issue. It’s a global issue,” Biden said of the crisis in Ukraine at the Quad meeting of the United States, Japan, India and Australia.
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Biden stressed Washington would stand with its allies and push for a free and open Indo-Pacific region.
“International law, human rights must always be defended regardless of where they’re violated in the world,” he said.
Ukrainian President Volodymyr Zelenskiy told global business leaders in Davos on Monday that the world must increase sanctions against Russia to deter other countries from using “brute force” to achieve their aims.
The European Union (EU) will likely agree on an embargo on Russian oil imports “within days”, its biggest member Germany has said, as Moscow said its economic ties with China would grow amid its isolation by the West over the Ukraine conflict.
Many of the EU’s 27 member states are heavily reliant on Russian energy, prompting criticism from Kyiv that the bloc has not moved quickly enough to halt supplies.
Hungary is demanding energy investment before it agrees to an embargo, clashing with EU states pushing for swift approval. The EU has offered up to 2 billion euros ($2.14 billion) to central and eastern nations lacking non-Russian supply.
“We will reach a breakthrough within days,” Germany’s economy minister, Robert Habeck, told broadcaster ZDF.
Russian Foreign Minister Sergei Lavrov said the Kremlin would focus on developing ties with China as economic links with the United States and Europe were cut.
“If they (the West) want to offer something in terms of resuming relations, then we will seriously consider whether we will need it or not,” he said in a speech, according to a transcript on the foreign ministry’s website.
“Now that the West has taken a ‘dictator’s position’, our economic ties with China will grow even faster.”
Russia’s three-month long invasion, the biggest attack on a European state since 1945, has seen over 6.5 million people flee abroad, turned entire cities into rubble, and prompted the unprecedented imposition of Western sanctions on Russia.
Zelenskiy on Monday called on Ukraine’s allies to pressure Moscow into a prisoner exchange.
“The exchange of people – this is a humanitarian matter today and a very political decision that depends on the support of many states,” Zelenskiy said in a question-and-answer video link with audience at the World Economic Forum in Davos.
“We do not need the Russian servicemen, we only need ours,” Zelenskiy said. “We are ready for an exchange even tomorrow.”
DONBAS FIGHTING
Russia sent thousands of troops into Ukraine on Feb. 24 for what it calls a “special military operation” to demilitarise its neighbour and root out dangerous nationalists – claims dismissed by Kyiv and Western countries as false pretexts for a land grab.
Having captured the port city of Mariupol in southeastern Ukraine last week after a months-long siege, Russian forces now control a largely unbroken swathe of the east and south.
They are trying to encircle Ukrainian forces and fully capture the Luhansk and Donetsk provinces that make up the eastern Donbas region, where Moscow backs separatist forces.
A total of 12,500 Russians were trying to seize Luhansk, the region’s governor, Serhiy Gaidai, said on Telegram. The town of Sievierodonetsk is being destroyed, but Ukraine has forced Russian troops out of Toshkivka to its south, Gaidai added.
Donetsk regional governor Pavlo Kyrylenko told local television that shelling was occurring along the front line, with the coal mining town of Avdiivka being hit round the clock.
Russian forces fired on 38 communities in Donetsk and Luhansk on Monday, killing seven and injuring six, Ukraine’s Joint Forces Task Force military command said.
Reuters was not immediately able to verify the information.
Zelenskiy revealed Ukraine’s worst military losses from a single attack of the war on Monday, saying 87 people had been killed last week when Russian forces struck a barracks at a training base in the north.
Denmark’s pledge to send Harpoon anti-ship missiles and a launcher to Ukraine, announced by the United States on Monday, is the first sign since the Russian invasion that Kyiv will receive U.S.-made weapons that significantly extend its striking range. read more
The Harpoons, made by Boeing (BA.N), could be used to push the Russian navy away from Ukraine’s Black Sea ports, allowing exports of grain and other agricultural products to resume.
In the first of what could be many war crimes trials arising from the invasion, a court in Kyiv sentenced a young Russian tank commander to life in prison for killing an unarmed civilian. read more
Ukraine is investigating over 13,000 alleged Russian war crimes, according to the website of its prosecutor general.
Russia has denied targeting civilians or involvement in war crimes.
At a cemetery outside Mariupol, treading through long rows of fresh graves and makeshift wooden crosses, Natalya Voloshina, who lost her 28-year-old son in the fight for the city, said many of Mariupol’s dead had no one left to honour their memory.
“Who will bury them? Who will put up a plaque?” she asked.
“They have no family.”
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Reporting by Oleksandr Kozhukhar in Lviv, Pavel Polityuk and Natalia Zinets in Kyiv, and Reuters journalists in Mariupol; Writing by Costas Pitas and Himani Sarkar; Editing by Rosalba O’Brien and Michael Perry
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DAVOS, Switzerland, May 23 (Reuters) – Multiple threats to the global economy topped the worries of the world’s well-heeled at the annual Davos think-fest on Monday, with some flagging the risk of a worldwide recession.
Political and business leaders gathering for the World Economic Forum (WEF) meet against a backdrop of inflation at its highest level in a generation in major economies including the United States, Britain and Europe.
These price rises have undermined consumer confidence and shaken the world’s financial markets, prompting central banks including the U.S. Federal Reserve to raise interest rates.
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Meanwhile, the repercussions on oil and food markets of Russia’s invasion of Ukraine in February – which Moscow describes as a “special military operation” – and COVID-19 lockdowns in China with no clear end have compounded the gloom.
“We have at least four crises, which are interwoven. We have high inflation … we have an energy crisis… we have food poverty, and we have a climate crisis. And we can’t solve the problems if we concentrate on only one of the crises,” German Vice Chancellor Robert Habeck said.
“But if none of the problems are solved, I’m really afraid we’re running into a global recession with tremendous effect .. on global stability,” Habeck said during a WEF panel discussion.
The International Monetary Fund (IMF) last month cut its global growth outlook for the second time this year, citing the war in Ukraine and singling out inflation as a “clear and present danger” for many countries. read more
IMF Managing Director Kristalina Georgieva, speaking in Davos on Monday, said the war, tighter financial conditions and price shocks – for food in particular – have clearly “darkened” the outlook in the month since, though she is not yet expecting a recession.
Asked at a panel whether she expected a recession, Georgieva said: “No, not at this point. It doesn’t mean it is out of the question.”
TIPPING POINT
European Central Bank (ECB) President Christine Lagarde, due to speak in Davos on Tuesday, has warned that growth and inflation are on opposing paths, as mounting price pressures curb economic activity and devastate household purchasing power.
“The Russia-Ukraine war may well prove to be a tipping point for hyper-globalisation,” she said in a blog post on Monday.
أشخاص يسيرون بجانب شعار المنتدى الاقتصادي العالمي في دافوس بسويسرا يوم الاثنين. تصوير: أرند ويجمان – رويترز.
“That could lead to supply chains becoming less efficient for a while and, during the transition, create more persistent cost pressures for the economy,” Lagarde added.
Still, she essentially promised rate hikes in both July and September to put a brake on inflation, even if rising borrowing costs are bound to weigh on growth. read more
“We knew, all knew from Day One that this war was bad economic news. Less growth and more inflation,” French policymaker Francois Villeroy de Galhau said. “This is the price we accepted together to pay to protect our values … It was worth paying this price.”
“I would play down the idea of a short-term trade off between inflation and growth,” he said. “In the short run, our priority is clearly … fighting inflation.”
While the economic drag from the Ukraine crisis is being most keenly felt in Europe, it is the U.S. economy that is experiencing the greatest price pressures.
The Consumer Price Index shot from near zero two years ago to a 40-year high of 8.5% in March. The Fed responded earlier this month with its largest rate hike in 22 years, and Chair Jerome Powell has signalled increases of a similar magnitude – half a percentage point – at its next two meetings at least.
The higher rates and expectations for more, though, have yet to weaken consumer spending and a red-hot U.S. job market.
“We’re not seeing it materialize in our business yet,” Marriott International Inc Chief Executive Anthony Capuano said of the threat of recession, adding: “There continues to be pent-up demand.”
Harvard University economist Jason Furman, head of the Council of Economic Advisers under former President Barack Obama, said his baseline probability for a recession in any year is 15%. Now “I’m a little bit higher that 15,” he said, citing the strength of household balance sheets and expectations for more people to return to the workforce in coming months.
Looking beyond that, however, he said he was concerned the Fed may need to lift rates higher than most officials and forecasters currently expect. “But that’s more like a year and a half, two and a half years from now.”
Key emerging markets, including China, are still expected to see growth this year, even if at a slower pace than previously estimated.
Marcos Troyjo, president of the New Development Bank set up by Brazil, Russia, India, China and South Africa, said his bank still expects “robust growth” this year in China, India and Brazil.
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Additional reporting by Jessica DiNapoli; Editing by Alexander Smith, Jan Harvey and Nick Zieminski
Our Standards: The Thomson Reuters Trust Principles.
Russia stops Finland gas flows over payment dispute
Polish president in Ukraine to address parliament Sunday
May 22 (Reuters) – Ukraine ruled out a ceasefire or concessions to Moscow while Russia intensified an offensive in the eastern Donbas region and stopped providing gas to Finland, as Polish President Andrzej Duda prepared to address the Ukrainian parliament on Sunday.
After ending weeks of resistance by the last Ukrainian fighters in the strategic southeastern city of Mariupol, Russia is waging a major offensive in Luhansk, one of two provinces in Donbas.
Russian-backed separatists already controlled swathes of territory in Luhansk and the neighbouring Donetsk province before the Feb. 24 invasion, but Moscow wants to seize the last remaining Ukrainian-held territory in Donbas.
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“The situation in Donbas is extremely difficult,” Ukrainian President Volodymyr Zelenskiy said in his nightly address. The Russian army was trying to attack the cities of Sloviansk and Sievierodonetsk, but Ukrainian forces were holding off their advance, he said.
Zelenskiy adviser Mykhailo Podolyak ruled out agreeing to a ceasefire and said Kyiv would not accept any deal with Moscow that involved ceding territory. Making concessions would backfire on Ukraine because Russia would hit back harder after any break in fighting, he said. read more
“The war will not stop (after concessions). It will just be put on pause for some time,” Podolyak, Ukraine’s lead negotiator, told Reuters in an interview in the heavily guarded presidential office. “They’ll start a new offensive, even more bloody and large-scale.”
Recent calls for an immediate ceasefire have come from U.S. Defense Secretary Lloyd Austin and Italian Prime Minister Mario Draghi. read more
The end of fighting in Mariupol, the biggest city Russia has captured, gives Russian President Vladimir Putin a rare victory after a series of setbacks in nearly three months of combat.
The last Ukrainian forces holed up Mariupol’s vast Azovstal steelworks surrendered on Friday, Russia said. read more
Full control of Mariupol gives Russia command of a land route linking the Crimean Peninsula, which Moscow seized in 2014, with mainland Russia and areas of eastern Ukraine held by pro-Russia separatists.
Ukrainian forces in the separatist-controlled regions of Luhansk and Donetsk said on Saturday they had repelled nine attacks and destroyed five tanks and 10 other armoured vehicles in the previous 24 hours.
Russian forces were using aircraft, artillery, tanks, rockets, mortars and missiles along the entire front line to attack civilian structures and residential areas, the Ukrainians said in a Facebook post. At least seven people had been killed in the Donetsk region, they said.
The British Ministry of Defense said on Sunday that Russia was deploying its BMP-T “Terminator” tank-support vehicles in that offensive. With only 10 available for a unit that already suffered heavy losses in the failed attempt on Kyiv, however, the ministry said they were “unlikely to have a significant impact.”
Russian troops destroyed a bridge on the Siverskiy Donets River between Sievierodonetsk and Lysychansk, Luhansk regional governor Serhiy Gaidai said. There was fighting on the outskirts of Sievierodonetsk from morning through the night, he said on the Telegram messaging app.
Sievierodonetsk and its twin Lysychansk across the Siverskiy Donets River form the eastern part of a Ukrainian-held pocket that Russia has been trying to overrun since mid-April after failing to capture Kyiv.
GAS DISPUTE
Russia’s state gas company, Gazprom (GAZP.MM), said it had halted gas exports to Finland, which has refused Moscow’s demands to pay in roubles for Russian gas after Western countries imposed sanctions over the invasion. read more
Finland and Sweden applied on Wednesday to join the NATO military alliance. read more
Finnish state-owned gas wholesaler Gasum, the Finnish government and individual gas-consuming companies in Finland have said they were prepared for a shutdown of Russian flows.
Most European supply contracts are denominated in euros or dollars. Last month, Moscow cut off gas to Bulgaria and Poland after they refused to comply with the new terms.
Western nations also have stepped up weapons supplies to Ukraine. On Saturday, Kyiv got another huge boost when U.S. President Joe Biden signed a bill to provide nearly $40 billion in military, economic and humanitarian aid. read more
Moscow says Western sanctions, along with arms deliveries for Kyiv, amount to a “proxy war” by the United States and its allies. Thousands of people in Ukraine have been killed in the war that has displaced millions and shattered cities.
Zelenskiy said he stressed the importance of more sanctions on Russia and unblocking Ukrainian ports in a call with Draghi on Saturday.
Duda, who met with Zelenskiy in Kyiv last month, is the first foreign leader to address parliament in person since the invasion, his office said.
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Reporting by Natalia Zinets, Max Hunder, Tom Balmforth in Kyiv, David Ljunggren in Ottawa, Lidia Kelly in Melbourne and Reuters bureaux, Writing by Madeline Chambers, Richard Pullin and Doina Chiacu; Editing by Nick Zieminski and Gerry Doyle
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SEOUL, May 21 (Reuters) – President Joe Biden and his new South Korean counterpart agreed on Saturday to hold bigger military drills and deploy more U.S. weapons if necessary to deter North Korea, while offering to send COVID-19 vaccines and potentially meet Kim Jong Un.
Biden and Yoon Suk-yeol said their countries’ decades-old alliance needed to develop not only to face North Korean threats but to keep the Indo-Pacific region “free and open” and protect global supply chains.
The two leaders are meeting in Seoul for their first diplomatic engagement since the South Korean president’s inauguration 11 days ago. The encounter between allies was clouded by intelligence showing North Korean leader Kim Jong Un is prepared to conduct nuclear or missile tests.
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Yoon had sought more assurances that the United States would boost its deterrence against North Korean threats. In a joint statement, Biden reaffirmed the U.S. commitment to defend South Korea with nuclear weapons if necessary.
The two sides agreed to consider expanding their combined military drills, which had been scaled back in recent years over COVID-19 and efforts to lower tensions with the North.
The United States also promised to deploy “strategic assets” – which typically include long-range bomber aircraft, missile submarines, or aircraft carriers – if necessary to deter North Korea, according to the statement.
Both leaders said they were committed to denuclearising North Korea and were open to diplomacy with Pyongyang.
“With regard to whether I would meet with the leader of North Korea, it would depend on whether he was sincere and whether he was serious,” Biden told a joint news conference.
He said Washington had offered COVID-19 vaccines to China and North Korea, which is combating its first acknowledged outbreak. “We’ve got no response,” Biden said.
North Korea reported more than 200,000 new patients suffering from fever for a fifth consecutive day on Saturday, but the country has little in the way of vaccines or modern treatment for the pandemic. read more
EXPANDING ALLIANCE
The U.S.-South Korea alliance, which dates to the 1950-1953 Korean War, must further develop to keep the Indo-Pacific “free and open”, Biden said.
U.S. President Joe Biden meets with South Korean President Yoon Suk-yeol at the Presidential Office in Seoul, South Korea May 21, 2022. Jung Yeon-je/Pool via REUTERS
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He said the alliance was built on opposition to changing borders by force – an apparent reference to Russia’s war in Ukraine and China’s claims over Taiwan.
The joint statement called for preserving peace and stability in the Taiwan Strait and freedom of navigation in the South China Sea.
When asked by reporters about possible reactions from Beijing, Yoon’s national security advisor Kim Sung-han said those issues were directly linked with South Korea’s national interests, as its ships use the routes.
“So I think there would be little room for Chinese retaliation or misunderstandings about this,” he said.
Changes in international trade and supply chains gave new impetus for the United States and South Korea to deepen their relationship, Yoon said, calling for cooperation on electric batteries and semiconductors.
Biden used the visit to tout investments in the United States by Korean companies, including a move by South Korea’s Hyundai Motor Group to invest about $5.5 billion to build its first dedicated fully electric vehicle and battery manufacturing facilities in the United States. read more
The two leaders toured a Samsung semiconductor plant on Friday, where Biden said countries like the United States and South Korea that “share values” needed to cooperate more to protect economic and national security.
Yoon said the concept of economic security will include cooperating in case of shocks in the foreign exchange market.
The South Korean president, keen to play a bigger role in regional issues, said his country would join Biden’s Indo-Pacific Economic Framework (IPEF), which will be announced during the trip to set standards on labour, the environment and supply chains.
China is South Korea’s top trading partner, and Yoon’s aides emphasized that neither the joint statement or the IPEF explicitly excluded any country.
While White House officials have sought to play down any explicit message of countering China, it is a theme of Biden’s trip and one that has caught the eye of Beijing.
“We hope that the U.S. will match its words with deeds and work with countries in the region to promote solidarity and cooperation in the Asia-Pacific, instead of plotting division and confrontation,” Chinese envoy for Korean affairs Liu Xiaoming, said on Twitter.
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Reporting by Trevor Hunnicutt, Hyonhee Shin, Jack Kim, Eric Beech and Josh Smith; Editing by William Mallard and Mike Harrison
Our Standards: The Thomson Reuters Trust Principles.