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Ukraine Latest: Death Toll Rises at Apartments Hit by Russia

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(Bloomberg) -- The Iranian government is preparing to provide Russia with as many as several hundred unmanned aerial vehicles including those that are weapons-capable, a top Biden administration official said.

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A senior US Treasury official said a proposal being explored by several of the world’s leading economies to cap the price of Russian oil exports would be crucial for preventing another global price spike to around $140 a barrel.

The death toll mounted to at least 33 people after Russian rockets hit an apartment building in the Donetsk region. Russian natural gas shipments to Europe via the Nord Stream pipeline to Germany stopped Monday for planned annual maintenance, and Western allies fear President Vladimir Putin will use the opportunity to cut off flows for good.

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

Key Developments

  • Treasury Says Russian Oil Price Cap Key to Avoid New Cost Shock

  • Iran Preparing to Send Russia ‘Weapons-Capable’ Drones, US Says

  • Worst of Global Energy Crisis May Still Be Ahead, IEA Says

  • Russia’s War Machine Still Getting Plenty of Cash From Oil

  • Gazprom Curtails Gas Flows to Italy by One Third in Further Cut

  • Natural Gas Is Gaining Ground, and the US Has Plenty of It

On the Ground

Ukrainian rescue workers recovered 33 bodies from the debris of the apartment block in Chasiv Yar, according to the State Emergencies Service. Russian rockets hit the five-story building near Kramatorsk in Ukraine’s eastern Donestsk region over the weekend. Ukraine sees signs of Russia preparing to renew military activity near Kramatorsk and Bakhmut as its forces continue to shell Ukrainian positions along the front line. Russian jets fired four missiles at Odesa region airspace of occupied Crimea, deputy Head of the President’s Office Kyrylo Tymoshenko said on Telegram. Ukrainian forces repelled several Russian assaults on the Slovyansk and Kharkiv axes, the Ukraine’s General Staff said in its morning update.

(All times CET)

Oil Sinks on Demand Concerns (6:08 a.m.)

Oil extended losses as a Covid-19 resurgence in China added to concerns about a global economic slowdown, with the International Energy Agency warning the worst of the energy crisis may be ahead. West Texas Intermediate lost over 1% to trade below $103 a barrel.

The market has tightened this year, in part due to upended trade flows from Russia after its invasion of Ukraine.

Global Energy Crisis May Get Worse, IEA Says (4:58 a.m.)

A global squeeze on energy supplies that has triggered crippling shortages and sent power and fuel prices surging may get worse, according to the head of the International Energy Agency.

“The world has never witnessed such a major energy crisis in terms of its depth and its complexity,” IEA Executive Director Fatih Birol said at a global energy forum in Sydney.

The whole energy system is in turmoil following the February invasion of Ukraine by Russia, at the time the biggest oil and natural gas exporter and a major player in commodities, Birol said.

Treasury Backs Oil Price Cap to Avoid Cost Shock (4:06 a.m.)

The senior official spoke to reporters in Tokyo where US Treasury Secretary Janet Yellen has begun a 10-day trip to Asia. At each stop, she’s planning to urge government officials to support the price cap plan. Group of Seven leaders agreed last week to explore the price limit plan.

Backers of the price-cap plan would like to set a limit for Russian oil just high enough to give Moscow an incentive to keep exporting. Estimates have put that in a range of $40-$60 a barrel. Closing the tap on Russian oil completely would also be economically and politically dangerous in a world beset with inflation.

Read more: Treasury Says Russian Oil Price Cap Key to Avoid New Cost Shock

Iran Prepares to Ship Drones to Russia, US Says (10:50 p.m.)

National Security Advisor Jake Sullivan said during a White House briefing that US intelligence “indicates that the Iranian government is preparing to provide Russia with up to several hundred UAVs, including weapons-capable UAVs, on an expedited timeline.”

He didn’t detail the intelligence or its sources. “Our information further indicates Iran is preparing to train Russian forces to use these UAVs, with initial training sessions slated to begin as soon as early July,” Sullivan added.

Ukraine State Railway Company Pays $36 Million Eurobond Coupon (6:44 p.m.)

Ukraine’s state-run railroad operator JSC Ukrainian Railway paid coupons on its Eurobonds due in 2024 and 2026, company CEO Oleksandr Kamyshyn said on his Telegram account.

“We paid the second and the last -- for this year -- coupon payment on Eurobonds,” he said. “This is $36 million.

EU Aims for Next Sanctions Package in Coming Weeks (5:20 p.m.)

The European Union plans to propose a new package of sanctions against Russia over its war in Ukraine in the coming weeks, according to people familiar with the matter.

Bloomberg reported earlier this month that the proposal could include restrictions on gold imports, measures to fix previous sanctions and further listings of individuals and entities.

Discussions on mechanisms to cap the price of oil are ongoing and unlikely to come in the near future, the people said. Some member states have been pushing to expand the bloc’s sanctions to hit gas, but there is little appetite among the vast majority of nations to go there.

Ukraine’s Richest Billionaire Gives Up Media Licenses (5:05 p.m.)

Rinat Akhmetov exited his media businesses, including several influential TV channels, as he seeks to comply with legislation pushed by Zelenskiy before Russia’s invasion that treats businessmen as “oligarchs” if they meet criteria such as having influence on media.

To avoid being treated as an oligarch, Akhmetov ended up transferring his media licenses to the state because difficulties with market transactions due to the short period given under the law to reduce media holdings, as well as the effects of the war, his company said in an emailed statement.

US Backs Canada on Sending Gas Turbine (5:00 p.m.)

The State Department backed Canada’s decision to export sanctioned pipeline equipment to Germany, arguing the move will help shore up European energy security.

The support, expressed by State Department spokesman Ned Price, gives a diplomatic boost to Prime Minster Justin Trudeau. His government has come under withering criticism from Ukraine and its large diaspora in Canada for agreeing to ship back gear that had been stranded in Montreal since fresh sanctions were imposed last month.

Putin, Erdogan Discuss Grain Ahead of Summit: Kremlin (4:15 p.m.)

Putin and Turkish leader Recep Tayyip Erdogan spoke by phone ahead of a summit, which may take place “soon,” the Kremlin said in an emailed statement. They discussed measures to increase trade volumes and payments in national currencies, as well as continued uninterrupted supply of Russian energy.

The leaders exchanged “opinions on situation around Ukraine, including in the context of coordinating efforts to ensure safety of shipping in the Black Sea and grain exports to global markets,” according to the Russian statement.

Ukraine Taps Danube Export Route After Russia Quits Snake Island (3:45 p.m.)

Ukraine said it can use an additional route tapping ports on the Danube River to move exports after Russian forces withdrew from Snake Island in the Black Sea, a strategic position that had helped Moscow block the country’s shipments.

Putin Extends Simplified Citizenship Process to Ukrainians (3:30 p.m.)

Putin is offering all Ukrainians a simplified process for obtaining Russian citizenship, Tass news service reports, citing the text of a decree published Monday.

Russia Current Account Hits Record (3:25 p.m.)

Russia’s current account surplus hit a record of $70.1 billion in the second quarter of the year, as surging revenues from energy and commodity exports helped offset the impact of US and European sanctions.

Read more: Russia Current Account Hits Record on Surging Energy Exports

Russia Is Destroying New Grain Harvest, Ukraine Says (2:05 p.m.)

Grain crops are being destroyed in the southern Mykolayiv and Odesa regions of Ukraine as Russian shells hitting the fields ignite fires, Natalia Humeniuk, a spokeswoman for the military’s southern command, said during a video briefing.

“Their main aim is to destroy everything which they can’t capture and appropriate immediately,” she said, adding that grain depots and elevators are also being targeted. She didn’t elaborate on the size of fields being destroyed as result of attacks.

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