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UKRAINE UPDATE: 26 JULY 2023

Russia widens conscription base; EU discusses facilitation of Kyiv grain exports

Russia widens conscription base; EU discusses facilitation of Kyiv grain exports
Municipal workers clean up near a damaged building after a drone attack in Moscow, Russia, on 24 July 2023. (Photo: EPA-EFE / Yuri Kochetkov)

European Union agriculture ministers discussed how to facilitate exports of Ukrainian grain after recent Russian strikes on Kyiv’s port infrastructure. Several eastern EU members want to extend their ban on purchases of Ukrainian grain while pledging to allow shipments to transit their territories to other destinations.

Russia is moving to expand its pool of military conscripts by raising the upper age limit to 30 as the Kremlin’s war on Ukraine extends into its 18th month.

While Russia has said draftees won’t be sent to fight in Ukraine, the changes may create an extra 2.4 million potential conscripts, according to Igor Yefremov, a researcher and specialist in demographics at the Gaidar Institute in Moscow. The new rules were approved in the lower House of Parliament on Tuesday, before being sent to the Upper House and then President Vladimir Putin.

Latest developments

 

 

 

US accuses Russia of ‘reckless’ drone action over Syria

A Russian fighter jet flew dangerously close to a US MQ-9 Reaper over Syria, firing flares that damaged the drone during a dangerously close encounter on 23 July, the Pentagon said on Tuesday.

Air Force Central Command said the damaged drone was able to return safely to its base. In a statement, Lieutenant-General Alex Grynkewich, head of the Air Force command, urged Russia’s forces in Syria “to put an immediate end to this reckless, unprovoked and unprofessional behaviour”.

The incident is the latest in a string of encounters between Russian jets and US drones in the region that have prompted US officials to warn about the risk of escalation and miscalculation.

Grain prices could rise up to 15% from Black Sea deal pause, says IMF

Global grain prices could increase by as much as 15% after Russia pulled out of a deal that allowed Ukraine to safely ship its grain through ports on the Black Sea, the International Monetary Fund’s chief economist said.

“It’s very clear that the Black Sea grain initiative was very instrumental in making sure that there will be ample grain supply to the world in the last year,” Pierre-Olivier Gourinchas told reporters on Tuesday. “The same mechanics work in reverse and it’s likely to put upward pressure on food prices.”

While the IMF is still assessing its forecasts on the effects of Russia’s action, a range of a 10% to 15% increase in prices of grains “is a reasonable estimate”, Gourinchas said.

Russia ended the Ukraine grain-export deal last week — almost a year into the agreement — heightening uncertainty over global food supplies and escalating tensions in the region. The move jeopardises a key trade route from Ukraine, one of the world’s top grain and vegetable oil shippers, just as its next harvest kicks off.

Russia seeks more military conscripts as Ukraine invasion drags on

Russia is seeking to widen the pool of soldiers it can potentially draw on to fight in Ukraine.

The lower House of Parliament on Tuesday approved a law raising the upper age limit for military conscripts from 27 to 30 years old under rules that would come into effect in 2024 after being endorsed by the upper house and signed into law by President Vladimir Putin.

While Russia has said it won’t send conscripts to fight in Ukraine, they can be mobilised once they finish their draft. The changes would mean an extra 2.36 million potential conscripts will become liable for 12-month military service, according to Igor Yefremov, a researcher and specialist in demographics at the Gaidar Institute in Moscow.

The extra recruits could help Putin to wage the conflict for longer and in theory bolster the army elsewhere.

Russia last year mobilised 300,000 men to bolster the ranks of its armed forces in Ukraine, which Putin invaded 17 months ago.

LNG supplies languish on ships amid high European inventories

Liquefied natural gas (LNG) stored on ships jumped to its highest level since May in a sign that weak demand and high inventories in Europe are pushing the fuel toward Asian markets.

The volume of LNG that has stayed on the water for more than 20 days topped 3.1 million tonnes this week — well above the average for the season — according to data compiled by Bloomberg. It comes as European gas storage levels are almost 84% full, lowering the immediate need for additional supplies amid higher flows from Norway and persistently sluggish industrial demand.

Yet rising benchmark futures raise questions about how long the lack of LNG deliveries can last if demand for fuel picks up later this year amid a colder-than-expected winter. Prices have also seen some gains recently amid concerns about escalating Russia-Ukraine tensions and heat waves in parts of Europe disrupting energy networks.

But they’re still about 60% lower since the start of the year, and gas consumption is subdued for now, indicating there’s more fuel available in the market than currently needed.

Saudi Arabian outlook veers from Russia with biggest IMF downgrade

Opec+ allies Saudi Arabia and Russia are at the opposite extremes of the International Monetary Fund’s (IMF’s) latest global outlook despite joint efforts to cut crude output.

The kingdom is getting the steepest growth downgrade among major economies from the IMF at a time when the Kremlin’s wartime budget stimulus helps offset its oil curbs. Saudi Arabia, the fastest-growing economy in the Group of 20 last year, is on track to expand by just 1.9% in 2023, a downward revision of 1.2 percentage points from the fund’s earlier estimate.

By contrast, the IMF improved its view of Russia by 0.8 percentage points and now expects the economy to add 1.5%, after what it said was a “large fiscal stimulus” in the first half.

For Saudi Arabia, the downgrade “reflects production cuts announced in April and June in line with an agreement through Opec+,” the IMF said in its World Economic Outlook published on Tuesday.

 

 

 

Wheat hits five-month high after Russia attacks Ukraine port

Wheat futures pared some of their recent gains as it emerged that Russia has failed to severely damage a key port that is allowing Ukraine to export grains by river into neighbouring countries.

Russian drones attacked the port of Reni in the night leading to Monday, driving up grain prices as it threatened to choke off Ukraine’s last major hope of getting its crops to buyers. But Reni was operating at maximum capacity on Tuesday, with seven ships due to enter, according to Romanian official Gabriel Covrig, who is responsible for ship piloting in the area.

Chicago futures, the most traded global benchmark, retreated by as much as 2.2%. On Monday, they jumped by 8.6% as traders tried to figure out the repercussions of damage to the river port. Shipments by river have become the last major route for grain to leave Ukraine after Russia exited a deal allowing passage through the Black Sea last week.

Nuclear monitors chide Russia over slack safety at Ukraine plant

Atomic monitors stationed at a Russian-occupied nuclear plant in southern Ukraine criticised Rosatom officials for slack safety oversight.

International Atomic Energy Agency (IAEA) observers saw mines placed in a buffer zone surrounding the Zaporizhzhia power plant during an inspection on Tuesday. While it’s not the first time explosives have been observed, their presence onsite at Europe’s biggest atomic power station “is inconsistent” with the IAEA’s safety standards, the Vienna-based watchdog wrote late Monday.

Russia is also continuing to disregard advice from safety regulators to bring all Zaporizhzhia’s six reactors into a state of cold shutdown, the IAEA reported.

In a note circulated among IAEA diplomats last week, Russia said that, between 11 and 17 July, its military stopped 87 aerial attempts to attack the plant. Background radiation at Zaporizhzhia remained within normal limits. DM

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