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Ukraine Latest: Talks on Oil Price Cap; Lessons for Taiwan

·8 min read

(Bloomberg) -- A US Treasury official and Ukraine’s finance minister discussed a plan to put a price cap on Russian oil being explored by several of the world’s leading economies, which is aimed at preventing another global price spike and limiting the Kremlin’s ability to finance its war.

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Ukraine’s moves to counter Russia’s larger military shows Taiwan that possessing advanced “asymmetric” weapons and a determination to resist invasion by a larger neighbor can be a successful combination, according to a senior US State Department official.

The United Nations secretary-general cited progress after talks with Ukraine and Russia in Istanbul on ways to resume grain exports from Black Sea ports blocked by Russian troops in the effort to ease pressure on global food markets.

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

Key Developments

  • Russia-Ukraine War Damps Prospects as G-20 Finance Chiefs Meet

  • Ukraine Shows Taiwan ‘Asymmetric’ Weapons Work, US Diplomat Says

  • Top Container Line Ships Russian Food Through Sea of Sanctions

  • Trading Looted Commodities Could Be a War Crime, Swiss AG Says

  • US Democrats Urge New $650 Billion IMF Aid on Ukraine War Hit

  • What If? Markets Plan Doomsday If Russia Turns Off the Gas

On the Ground

Ukrainian rescue workers are still recovering bodies from the debris of a five-story apartment block where at least 48 people were killed, according to the State Emergencies Service. Russian rockets hit the building near Kramatorsk in Ukraine’s eastern Donetsk region over the weekend, in one of the deadliest such attacks of the war. Russian forces continued shelling the Slovyansk area, according to Ukraine General Staff statement. Russia also struck the Dnipro region further west overnight, the regional governor, Valentyn Reznichenko, said on his Telegram account.

(All times CET)

War Damps Prospects as G-20 Finance Chiefs Meet (6:32 a.m.)

An impasse on how to characterize the economic fallout from Russia’s invasion is hanging over prospects for an agreement on it and related issues as finance chiefs gather for the Group of 20 meetings in Bali.

Disagreements on the causes and ways to alleviate supply-chain and inflation crises stemming from the war are set to complicate efforts to settle on a communique at the end of the gathering on Saturday, according to people familiar with the matter.

Read More: Russia-Ukraine War Damps Prospects as G-20 Finance Chiefs Meet

Adeyemo, Ukraine’s Marchenko Discuss Price Cap (3:26 a.m.)

US Deputy Treasury Secretary Wally Adeyemo and Ukraine Finance Minister Serhiy Marchenko discussed progress made toward implementing a price cap on Russian oil, according to a White House readout.

The price cap would restrict revenue for Russia’s military while dampening the impact of the war on global oil and energy prices. The aim is an arrangement to ban, by the end of this year, the insurance and transport services needed to ship Russian crude and petroleum products unless the oil is purchased below an agreed price.

Read more: US, Allies Discuss Capping Russian Oil Price at $40-$60 a Barrel

Ukraine Shows Taiwan ‘Asymmetric’ Weapons Work (11:31 p.m.)

Jessica Lewis, assistant secretary of state for political-military affairs, said Ukraine’s use of US-provided Javelin anti-tank systems and Stinger anti-aircraft weapons -- considered asymmetric because they can help a smaller force battle a stronger opponent -- hold lessons for the defense of Taiwan, which China has threatened with invasion.

“One of the things that everyone is thinking about when it comes to Taiwan, and I think a lesson learned from this war, is that asymmetric works,” she said at a Center for International and Strategic Studies event on US security assistance to Ukraine.

Read more: Ukraine Shows Taiwan ‘Asymmetric’ Weapons Work, US Diplomat

North Korea Recognizes Donetsk and Lugansk Republics (11:20 p.m.)

North Korea recognized the Russian-backed breakaway regions of Donetsk and Lugansk in eastern Ukraine as independent states, according to the country’s official Korean Central News Agency. It said the North Korean foreign minister sent letters to her counterparts in the two regions informing them of the decision.

Last month Syria, another close Russian ally, also said it would recognize the so-called Donetsk People’s Republic and Luhansk People’s Republic as sovereign states.

UN’s Guterres Cites Progress on Ukraine Grain Exports (8:50 p.m.)

UN Secretary-General Antonio Guterres said talks among Ukraine, Russia, Turkey and the United Nations in Istanbul had resulted in a “critical step” forward to ensuring the safe and secure export of Ukrainian food products through the Black Sea.

Earlier, Turkey’s defense minister said that the parties had agreed on the “main technical principles,” and will meet again in Turkey next week to further discuss details.

Still, no statement was issued from Kyiv and Moscow, and talks over unblocking ports have been going on for months. Crop shipments from Ukraine -- one of the world’s biggest wheat, corn and vegetable-oil exporters -- have been severely limited by Russia’s invasion, which blocked Ukraine’s Black Sea ports. That sent global food prices to record levels earlier this year and raised worries about rising hunger.

Ukraine Police Say Russian Shelling Set Off Grain Field Fires (7:19 p.m.)

Sparks from Russian shells sparked fires in grain fields in the southern Zaporizhzhia region, destroying wheat and rapeseed crops across more than 600 hectares (1,500 acres), according to Ukraine’s national police. More than 800 hectares of wheat fields in the region were destroyed in the same way last week, the police said.

As a global grain shortage worsens, farmers in Ukraine started harvesting last month and harvesting is in full swing.

US Demands Russia Stop Mass Deportations of Ukrainians (4:37 p.m.)

US Secretary of State Antony Blinken demanded Moscow halt the detention and forced or coerced removal of Ukrainian citizens to Russia and let independent observers access “filtration facilities” and areas where the Ukrainians are being sent.

In a statement Blinken said estimates including those from the Russian government indicate as many as 1.6 million Ukrainian citizens have been forcibly deported from areas occupied by Russian forces, including more than a quarter of a million children in what he called “an apparent effort to change the demographic makeup of parts of Ukraine.”

Ukrainian authorities have accused Russian troops of abducting, disappearing, torturing and executing thousands of people. Forcibly displacing people is considered a war crime. The Kremlin has said Ukrainians are fleeing to Russia voluntarily and it is offering them aid.

Ukraine Expects $4.4 Billion in Aid in July (3:39 p.m.)

Ukraine expects to get $4.4 billion from international partners this month, Finance Minister Serhiy Marchenko said. It will be on par with June, he said in a TV interview. Marchenko reiterated that Ukraine needs $5 billion a month to finance the budget gap.

EU Updates Guidance on Sanctioned Shipments to Kaliningrad (3:36 p.m.)

The EU stood by its previous guidance that sanctioned goods transiting from Russia through member states isn’t allowed by road, but added that there is no prohibition on rail transit.

The EU issued a statement following a request from Lithuania on the bloc’s position on the issue, which affects the transit of goods to Russia’s Baltic exclave Kaliningrad.

Putin’s Daughter to Help Economy Beat Sanctions, RBC Reports (3:15 p.m.)

Russian President Vladimir Putin’s younger daughter has been handed a new role with the country’s most powerful business lobby to help beat the impact of international sanctions over his war in Ukraine, the RBC newspaper reported.

Katerina Tikhonova, who is sanctioned by the US and its allies, was named co-chairman of a committee to coordinate import-substitution efforts by the Russian Union of Industrialists and Entrepreneurs, known as RSPP, according to the report.

Ukraine Starts Harvest in Areas It Controls (2:04 p.m.)

Ukraine has begun harvesting grain in all of the regions that the government controls, and yields are “not bad,” Deputy Agriculture Minister Taras Vysotskyi said.

“We are constantly working to find all available routes for grain export -- by trucks, railway and the Danube river,” he said, adding that the Danube won’t compensate for capacity lost at Ukraine’s Black Sea ports.

EU Plans to Cushion Impact of Sudden Gas Halt (1:50 p.m.)

The EU is preparing for the risk that Moscow will halt the shipments of natural gas in an abrupt and unilateral way by recommending measures to curb gas consumption and lower future costs for businesses and consumers, according to a draft document seen by Bloomberg News.

The draft guidelines to member states include proposals on fuel-switching in industries and power production to save gas, market-based measures to incentivize less consumption by large users and information campaigns to reduce heating and cooling, as well as mandatory limits during extreme situations.

(A previous item corrected the spelling of Ukrainian finance minister’s name, which was listed incorrectly in an official document.)

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