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Ukraine Latest: Gazprom Won’t Reopen Pipeline; Oil Price Cap

·6 min read
Ukraine Latest: Gazprom Won’t Reopen Pipeline; Oil Price Cap

(Bloomberg) -- Russia’s Gazprom PJSC said its key gas pipeline to Europe won’t reopen as planned, moving the region a step closer to blackouts, rationing and a severe recession. That announcement came hours after the Group of Seven said it plans to implement a price cap for global purchases of Russian oil.

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The European Union is preparing to unveil a new $5 billion package of aid for Ukraine, possibly next week. Global food prices tracked by the United Nations fell for a fifth month after hitting records in the spring, helped at the margins by the restart of Ukraine’s grain exports.

UN monitors visited a Russian-occupied atomic plant in Ukraine to evaluate how continued military attacks against the facility risk a nuclear accident. One team is to remain at the Zaporizhzhia plant as a “resident expert presence,” International Atomic Energy Agency Director General Rafael Mariano Grossi said late Thursday.

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

Key Developments

  • Gazprom Won’t Reopen Gas Pipeline in Energy Shock to Europe

  • Yellen’s Win on Russia Oil Still Faces Risky Road to Success

  • Netherlands Expects to Reach 80% Gas Storage Target Next Week

  • Russian Gas Link Set to Restart as Traders Weigh Further Halts

  • EU Set to Unveil $5 Billion Package for Ukraine Next Week

On the Ground

Ukraine continued artillery attacks on Russian reserves, control centers and transport inside occupied territories. An ammunition depot near an airfield in Melitopol in Zaporizhzhia was targeted, said Mayor Ivan Fedorov. Russian forces struck military and civilian targets in the east and south of Ukraine with artillery, missiles and aviation bombs. Four civilians were reported killed and 10 wounded in the Donetsk region.

(All times CET)

IAEA’s Grossi Returns From Ukraine Nuclear Plant With Concerns (9:03 p.m.)

International Atomic Energy Agency Director General Rafael Mariano Grossi returned to Vienna after visiting the Russian-occupied Zaporizhzhia Nuclear Power Plant in Ukraine.

“The physical integrity of the plant has been violated several times,” Grossi said, calling the attacks against the facility “unacceptable.”

Russian and Ukrainian engineers at the station have struck a fragile working relationship to keep reactors operational, he said.

The IAEA has stationed two permanent monitors at Zaporizhzhia to collect real-time information that can be reported to Vienna, Grossi said. Attacks at Europe’s biggest nuclear power plant have increased since the beginning of July, with Ukraine and Russian officials blaming each other for the strikes.

Gazprom Won’t Reopen Gas Pipeline in 11th Hour Blow to Europe (7:59 p.m.)

Russia’s Gazprom PJSC said its key gas pipeline to Europe won’t reopen as planned, moving the region a step closer to blackouts, rationing and a severe recession.

The pipeline was due to reopen on Saturday after maintenance. But in a last-minute statement late on Friday, the company said a technical issue had been found and the pipe can’t operate again until it’s fixed. The European Union said Gazprom was acting on “fallacious pretenses.”

It’s a massive blow to Europe, which is scrambling to cut its dependency on Russian gas before winter and has been waiting for Moscow’s next steps in the energy war. As the continent tries to implement measures to get through the winter, the indefinite closure of the pipeline is an escalation that threatens more economic turmoil.

Russia Ready to Ramp Up Grain Exports, Tass Reports (4:50 p.m.)

Russia is ready to export as much as 30 million tons of grain in the second half of 2022, Tass reported, citing the country’s agriculture ministry.

The estimate looks high given Russia’s shipments in July and August, which fell 22% from a year earlier to 6.3 million tons.

Russia is expected to harvest a record wheat crop of almost 95 million tons, according to the research firm SovEcon, but has been struggling to move grain out of the country.

Ukraine Says Nuclear Power Unit Back on Grid (4:05 p.m.)

Power unit No. 5 at the Zaporizhzhia nuclear plant, which was shut down on Thursday due to shelling in the surrounding area, is back on the grid, Ukraine’s Energoatom said on Telegram.

The unit was reconnected at 1:10 p.m. Kyiv time, and capacity is being added, the plant operator said.

Two power units are currently operating at the plant, producing energy for domestic needs. IAEA monitors who arrived Thursday to evaluate the facility continue to work, Energoatom said.

Suspected Russian Group Hacks Italian Energy Agency (3:58 p.m.)

A hacker group with links to Russia has claimed responsibility for a recent ransomware attack targeting Italy’s energy industry, amid an escalation the Rome-based government says could be related to the Russian invasion of Ukraine.

G-7 Backs Price-Cap Plan for Russian Oil (2:59 p.m.)

The Group of Seven industrialized countries said they plan to implement a price cap for global purchases of Russian oil, a measure the US hopes will ease energy market pressures and slash Moscow’s overall revenues.

The ministers said they plan to implement a price cap in line with the timing of European Union sanctions on Russian oil set to kick in on Dec. 5.

G-7 Backs Price-Cap Plan for Russian Oil to Limit Revenue

Number of Internally Displaced Ukrainians Still Rising (2:15 p.m.)

As Russia’s invasion “shows no signs of abating” well into its sixth month, evacuations from eastern and southern regions of pushed the number of internally displaced Ukrainians up 5% to almost 7 million, the International Organization for Migration said in a survey conducted in the second half of August.

The number of the displaced dropped in early summer from a peak of over 8 million people around May, but started to rise again from late June, the Geneva-based group said.

Nearly half of adult displaced Ukrainians aren’t earning money, and most displaced households cut essential expenses, took on lower-income or lower-qualification jobs, and dipped into savings. The situation is “particularly alarming” as winter approaches, the IOM said.

EU to Soon Unveil $5 Billion Package for Ukraine (1:16 p.m.)

The European Union is preparing to release a new funding package of 5 billion euros for Ukraine, said diplomats familiar with the plan.

The European Commission, the EU’s executive arm, will propose the loan package next week to help Kyiv cover urgent costs including salaries and benefits, the people said.

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