Ukraine Latest: US to Send Advanced Rockets; Russia Holds Drills

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(Bloomberg) -- The US will provide Ukraine with advanced rocket systems and other weaponry to help it fight invading forces, President Joe Biden said in a New York Times essay, adding he’s not seeking a war between NATO and Russia.

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Russia’s military said it’s holding drills that involve nuclear-capable missiles but gave no indication if a test-launch is imminent. European Union leaders wrapped up a two-day summit after agreeing to pursue a ban on Russian oil imports, as Kremlin-led forces closed in on Ukraine’s eastern region of Luhansk.

Wheat in Chicago plunged the most allowed by the exchange on improved prospects for Ukraine grain shipments. Russia discussed Black Sea exports with Turkey and said it is willing to help ensure Ukrainian exports, though the Kremlin provided no details and some analysts expressed doubts.

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

Key Developments

  • Russia’s $285 Billion Oil and Gas Bonanza Is Funding Putin’s War

  • Russian Yachts and Money Are Going Where US Influence Has Waned

  • Biden Says US Will Provide Advanced Rocket Systems to Ukraine

  • Grain Futures Plummet With Ukraine Export Prospects in Focus

  • EU Leaders Back Push to Ban Most Russia Oil Over Putin’s War

  • Europe’s Move Against Putin’s Oil May Be Its Last for a While

All times CET:

Danes Vote on Joining EU’s Defense Pact (6:01 a.m)

Danes will vote Wednesday on joining the European Union’s defense pact as the country is pushed closer to the bloc by Russia’s war.

Most polls suggest the Nordic nation, which has traditionally shunned deeper integration with the EU, is set to approve ending an opt-out that has excluded it from the bloc’s defense partnership since 1993. The referendum coincides with Russia cutting natural gas supply to Denmark on the same day.

Read more: Danes Vote on Joining EU’s Defense Pact, Daunted by Russia’s War

Russia Holds Drills With Ballistic Missiles (4:53 a.m.)

Russia’s strategic rocket forces are holding drills with Yars ballistic missiles on mobile launchers in the Ivanovo region to the northeast of Moscow, Interfax reported, citing the Defense Ministry. The RS-24 Yars intercontinental ballistic missile can carry up to three nuclear warheads and has a range of about 10,500 kilometers (6,500 miles), according to the Center for Strategic & International Studies Missile Threat project.

In April, Russia said it test-fired a new ICBM, in a move Putin indicated at the time would give the US and its allies something to think about. The Russian leader has warned that any intervention by other countries in the conflict would trigger “consequences you have never seen.”

Read more: Russia Test-Fires Nuclear-Capable ICBM in Warning to U.S. Allies

Oil Edges Higher as Investors Assess OPEC+ (4:42 a.m)

Oil rose above $115 a barrel as investors assessed the future of OPEC+ unity, with ministers from the group preparing for a routine meeting Thursday to discuss its supply policy for July.

West Texas Intermediate closed lower on Tuesday after the Wall Street Journal reported that OPEC members are exploring the idea of suspending Russia from its oil-production deal. Financial sanctions are undercutting Moscow’s ability to pump more.

Lavrov Meets Saudi Foreign Minister (3:05 a.m.)

Russian Foreign Minister Sergei Lavrov met Saudi Foreign Minister Prince Faisal bin Farhan in Riyadh on Tuesday and discussed the expansion of trade and economic cooperation between the countries, Russia’s foreign ministry said in statement. They also praised cooperation with OPEC+ and the nations’ joint effort in creating oil price stability in the markets.

Biden Says US to Give More Advanced Rocket Systems (1:40 a.m.)

In his guest essay for the New York Times titled “What America Will and Will Not Do in Ukraine,” Biden said that along with the rockets, the US will keep a supply flowing of advanced weaponry including Javelin anti-tank missiles, Stinger antiaircraft missiles, powerful artillery and unmanned aerial vehicles.

“America’s goal is straightforward: We want to see a democratic, independent, sovereign and prosperous Ukraine with the means to deter and defend itself against further aggression,” Biden wrote. The package of weapons includes missiles that will allow Ukraine to strike locations as far as 80 kilometers away, a senior US official told reporters on condition of anonymity.

Biden added that while he disagrees with Putin and is outraged by his actions, “the United States will not try to bring about his ouster in Moscow.”

Read more: Biden Says US Will Provide Advanced Rocket Systems to Ukraine

Grain Futures Plummet (11:37 p.m.)

The improved prospects for world supplies sent most-active Chicago wheat futures down as much as 6.1% to their daily price limit of $10.875 a bushel, settling the day at the lowest level since May 4. The July contract tied to hard red winter wheat also fell by the exchange limit.

Grains have traded at near-record levels since Russia’s invasion of Ukraine upended supply routes, adding to rampant inflation of food and livestock feed.

Russia Cut off Communication in Occupied Kherson (9:10 pm)

Russia cut off mobile, internet and landline service in Ukraine’s southern region of Kherson, according to the Ukrainian state communications company.

Ukrainian providers started to record interruptions beginning on Monday, and then a total cut-off of services in Kherson region, which has been under Russian occupation after Moscow invaded the country in February.

Kyiv says it is impossible to restore communication in the Kherson region because Russia controls the equipment.

Germany, Greece Reach Deal on Heavy Weapons (8:01 p.m.)

Germany and Greece agreed to send more heavy military equipment to Ukraine, as Berlin draws criticism from Kyiv for reluctance to provide weapons including tanks and infantry fighting vehicles.

Berlin is working with several eastern European countries, including the Czech Republic, on tank rotation deals under which those states send Soviet-era military equipment to Ukraine. Germany then pays in turn for the delivery of modern tanks from German defense companies to those countries.

EU Leaders Debate Whether It’s Worth Calling Putin (5:20 p.m.)

EU leaders discussed whether it was worth reaching out to Putin by phone following a debate over whether the calls undermine efforts to isolate the Russian president versus those who say contact is needed to find peace, the Czech prime minister said.

Speaking after the two-day summit in Brussels, Czech Premier Petr Fiala said some EU leaders argued that no one should call Putin, while others said they felt it was important to know what he is seeking as an avenue to help end Russia’s attack on Ukraine.

Russia Cuts Gas Shipments to Denmark Ahead of EU Defense Vote (5:08 p.m.)

Russia will halt gas shipments to Denmark just as the Nordic country holds a referendum on joining the EU’s defense pact. Orsted A/S, Denmark’s biggest utility, said deliveries would halt on Wednesday, following an announcement Monday that the company had no intention to comply with new ruble payment terms imposed earlier this year by Gazprom PJSC and Putin.

Danes are voting on Wednesday on the EU military pact, a referendum the government has called in response to Russia’s invasion of Ukraine. Polls suggest the Nordic nation, which has traditionally shunned deeper integration with the EU, will join and thereby move closer to the bloc.

Russia Cuts Gas Shipments to Denmark Ahead of EU Defense Vote

Macron Says EU Embargo on Russian Gas Mustn’t Be Ruled Out (4:11 p.m.)

The French leader said an EU ban on Russian gas imports -- a far more ambitious endeavor than an oil embargo -- must not be ruled out. Europe needs to “maintain its credibility” in dealing with Moscow, since nobody knows how the war will evolve.

Macron said strategic ambiguity is useful. He also said he will keep talking to Putin “on a regular basis” to keep diplomatic efforts alive, and that he speaks to the Russian leader at the request of Volodymyr Zelenskiy.

Russia Has Pumped More Oil in May as Producers Reroute Exports (4:06 p.m.)

Russia’s crude oil and condensate output has risen in May following two months of declines as the country’s producers found new markets for their cargoes.

The nation pumped an average of 1.39 million tons a day in the first 30 days of May, according to data from the Energy Ministry’s CDU-TEK unit seen by Bloomberg News. That equates to 10.188 million barrels a day, up 1.4% on April, Bloomberg calculations show.

Russia Has Pumped More Oil in May as Producers Reroute Exports

Russia Holds Drills With ICBMs (3.53 a.m.)

Russia’s strategic rocket forces are holding drills with Yars intercontinental ballistic missiles on mobile launchers in the Ivanovo region to the northeast of Moscow, Interfax reported, citing the Defense Ministry. The RS-24 Yars ICBM can carry up to three nuclear warheads and has a range of about 10,500 kilometers (6,500 miles), according to the Center for Strategic & International Studies Missile Threat project.

In April, Russia said it test fired a new ICBM, in a move Putin indicated at the time would give the U.S. and its allies something to think about. The Russian leader has warned that any intervention by other countries in the conflict would trigger “consequences you have never seen.”

Read more: Russia Test-Fires Nuclear-Capable ICBM in Warning to U.S. Allies

Europe Considers Aid Plan to Help Tackle Africa Food Crisis (3:38 p.m.)

The EU is considering a proposal to channel about 500 million euros ($535 million) to Africa to help tackle the continent’s food crisis as the invasion of Ukraine cuts off vital supplies, according to people familiar with the matter.

EU leaders meeting in Brussels discussed using untapped reserves from the European Development Fund to boost aid to the continent, said the officials who asked not to be named about confidential talks.

Soldiers, Weapons in Nuclear Plant, Energoatom Chief Says (1:50 p.m.)

There are near 500 Russian soldiers, heavy machinery, tanks, weapon and explosive at the Zaporizhia nuclear power plant in the southern Ukrainian city of Enerhodar, Petro Kotyn, the head of the state-run nuclear power producer Energoatom, told reporters in Kyiv.

“Nobody understands until now why they came here,” Kotyn said, adding that there’s currently no possibility to re-route power to occupied Crimea. Kotyn accused occupiers of engaging in abductions and torture, as Ukraine maintains technical control over the plant’s personnel.

Ukraine’s 15 nuclear power generators are producing half of their capacity because demand has dropped significantly since the invasion, Kotyn said. Half of all power blocks are now operating and demand for power is fully met. Consumption of nuclear power by producers fell by 38% since the war started and by 18% for households.

Germany’s Habeck Says Orban Is Hurting Europe With Oil Tactics (1:42 p.m.)

German Economy Minister Robert Habeck harshly criticized Hungary’s premier for holding out for steep concessions before agreeing to the EU’s compromise deal.

“This is just a bargain and not working to the benefit of European citizens,” Habeck said at an industry lobby event in Berlin. Orban’s push for a deal “is a misunderstanding of what an oath of office really means,” he added.

Russian Forces Advance Toward Capturing All of Luhansk Region (1:36 p.m.)

Russian forces slowly advance toward the center of Sievierodonetsk, one of the few cities in Ukraine’s eastern Luhansk region still under control of Kyiv-led forces, the region’s governor, Serhiy Haiday, said in televised comments. Some 15,000 out of the pre-invasion population of 106,000 remain in the city, he said.

Even as the Russian military occupies areas around the city, Ukrainian forces still have a path to retreat across the river to better-defended Lysychansk, Haiday said.

The regions of Luhansk and Donetsk make up the Donbas, the easternmost part of Ukraine whose capture is now the Kremlin’s top objective. Donbas was riven by fighting before Russia’s invasion, after the Kremlin stoked a military conflict between Moscow-backed separatists and Ukrainian forces there in 2014.

Ukraine’s Grain Exports Drop 62% in May (11:42 a.m.)

Ukraine’s grain exports fell 62% in May from a year earlier, according to data published by the Agriculture Ministry, because the country’s seaports have been blocked by Russian troops.

The total includes 42,000 tons of wheat, 11,000 tons of barley and about 1 million tons of corn.

Russia’s RenCap Closing NY Office, Research (10:58 a.m.)

Russian billionaire Mikhail Prokhorov’s Renaissance Capital investment bank will close its New York office and has terminated research coverage of all sectors globally after Putin’s invasion upended its business.

RenCap, one of Russia’s oldest investment banks, may also close its London operations, according to people familiar with the decision who asked not to be identified because the information is not public.

Russia’s RenCap Closing New York Office, Research Amid Sanctions

Pamplona Seeks Help to Cut Oligarch Ties (10:42 a.m.)

Private equity firm Pamplona Capital Management tapped investment bank Jefferies Financial Group Inc. for help cutting ties with its Russian oligarch backers, said people familiar with the matter.

Pamplona has also held preliminary talks with at least one firm, Apollo Global Management Inc., some of the people said, as it explores ways to free up cash and replace its biggest source of funding: investment conglomerate LetterOne Holdings SA, whose shareholders include sanctioned Russian tycoons Mikhail Fridman and Petr Aven. Neither Pamplona nor LetterOne has been sanctioned.

Pamplona Seeks Help From Jefferies, Apollo to Cut Oligarch Ties

Abramovich Challenges EU Sanctions (10:34 a.m.)

Roman Abramovich has joined the long list of billionaires challenging their inclusion on the EU’s sanctions lists in response to Russia’s invasion of Ukraine. Abramovich submitted his appeal on May 25, according to filing on EU Court of Justice website.

The EU added the Russian billionaire to its list on March 15, saying that Abramovich “has long and close ties to Vladimir Putin” which “helped him to maintain his considerable wealth.”

EU Targets Russia’s Biggest Lender Sberbank (10:04 a.m.)

EU countries are set to cut Russia’s largest lender Sberbank off the SWIFT international payments system, as the bloc readies its sixth package of sanctions. The proposed restrictions also target Credit Bank of Moscow and the Russian Agricultural Bank, according to people familiar with the discussions. The EU, the US and the UK have already banned several Russian banks from using SWIFT.

The EU is still sparing Gazprombank, which is handling European payments for Russian gas. Putin imposed new payments terms on European companies, which include opening a ruble account with Gazprombank.

Time for Sanctions Pause, Belgian Leader Says (9:54 a.m.)

EU leaders praised the bloc for striking a deal on the oil embargo, but some leaders suggested the sixth sanctions package may be the last for a while.

“This package is a big step forward and I think we should pause it for now,” Belgian Prime Minister Alexander De Croo told reporters. “The impact of an oil ban is much bigger for Russia than for gas. Gas is way more complicated so this is an important step.”

Other leaders, like Latvian Prime Minister Krisjanis Karins, said the bloc must push ahead and embargo gas. “We said it should be the full energy embargo,” he told Bloomberg TV.

Russian Stocks Drop Third Day on EU Oil Ban (9:30 a.m.)

Russia’s equity benchmark fell for a third consecutive session on Tuesday after EU leaders agreed to pursue a partial ban on Russian oil. The MOEX Russia Index slumped 1.1% as of 10:29am in Moscow, heading for a 3% drop this month and extending its 2022 losses to 38%.

Oil giants Lukoil, Rosneft and Tatneft were among the worst performers, along with Sberbank, Novatek, Yandex and Polyus.

Kuleba Slams Germany Over Apparent Arms Delay (9 a.m.)

Ukrainian Foreign Minister Dmytro Kuleba directed more sharp criticism at Germany over apparent delays to shipments of promised weapons.

“There are countries we are waiting for to deliver and countries we are tired of waiting for,” Kuleba said in an interview with Italy’s la Repubblica newspaper when asked about arms pledged by the government in Berlin. “Germany belongs to the second group.”

Germany announced plans to supply heavy weaponry a month ago. But so far, none of the seven armored howitzers and an initial 15 Gepard armored vehicles have been delivered. Defense Minister Christine Lambrecht on Monday justified the delay by saying that Ukrainian soldiers need 40 days of training to use the howitzers, while the vehicles aren’t yet in condition to be sent.

EU Oil Ban Is ‘Inflationary for All,’ RBC Says (8:22 a.m.)

The EU’s partial ban on Russian oil flows may be a foreign policy win for the West, but is “inflationary for all nations involved given that the reshuffling of global flows is likely to be structural,” RBC Capital Markets said.

“Global trade flows are certain to be upended,” analysts including Michael Tran and Helima Croft wrote in a note dated May 31. They predicted that 1.2 million to 1.5 million barrels per day of seaborne crude shipments from Russia will be “backed out.”

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