Drone hits Danube River port, driving up wheat price; Russian oil products trading above G7 price cap despite sanctions

Drone hits Danube River port, driving up wheat price; Russian oil products trading above G7 price cap despite sanctions
The site of a drone attack on port infrastructure in the Odesa region, southern Ukraine, on 2 August 2023. (Photo: EPA-EFE / Odesa Regional Administration Handout)

Russian forces struck Ukraine’s Danube River port of Izmail in a drone attack, according to government and industry officials. Wheat and maize prices surged after the attack.

A Russian drone strike on Ukraine’s Danube River port of Izmail damaged grain storage facilities, a fuel tank and administrative buildings in the Odesa region in southwestern Ukraine, the country’s prosecutor’s office said on Wednesday. Russia has stepped up strikes on Danube ports to cripple Kyiv’s ability to export food since the Kremlin halted a deal that allowed Ukraine to use a safe corridor on the Black Sea last month.

“The world has to react,” President Volodymyr Zelensky said on Telegram. “When civilian ports are targets, when terrorists deliberately destroy even silos — this is a threat to everyone on all continents. Russia can be and must be stopped.”

Latest developments




South Africa says BRICS Summit will move forward on expansion 

A planned announcement on the expansion of BRICS at a forthcoming summit in South Africa will mark a significant change in the global order, the nation’s ambassador to the five-nation bloc said, even as some of its members push back against new admissions.

Heads of state from Brazil, Russia, India, China and South Africa will make a pronouncement on the enlargement of the group when they meet on August 22-24, Anil Sooklal said in a lecture at the University of KwaZulu-Natal on Wednesday. Twenty-two nations have asked formally to become full-time members of the group, and more than 20 others have submitted informal requests.

China favours a rapid expansion of the bloc, which will require consensus among its members. But it has encountered opposition from India, which wants strict rules on how and when other nations could move closer to the group without formally enlarging it, and from Brazil, which is wary of alienating the US and European Union, according to officials with knowledge of the matter.

Read more: China’s bid to expand BRICS said to get India, Brazil pushback

“BRICS has been a catalyst for a tectonic change you will see in the global geopolitical architecture starting with the summit,” Sooklal said. While he emphasised that the bloc doesn’t see itself as a counterweight to any other organisation, he said its expansion was stoking anxiety and opposition among nations in “privileged positions.”

Russian leader Vladimir Putin will participate at the gathering virtually, avoiding the risk of possible arrest on a warrant from the International Criminal Court for alleged war crimes if he travels to South Africa, which is a member of the tribunal.

A decision on whether Indian Prime Minister Narendra Modi will attend has yet to be taken, although necessary security arrangements have been made and other pre-visit formalities have been completed, according to a person with knowledge of the matter.

While Modi’s absence may be viewed as a snub to the host and he would miss out on bilateral meetings with other leaders, India isn’t comfortable with him holding talks with Chinese President Xi Jinping while a border dispute remains unresolved, they said.

So far, representatives from 71 nations have been invited to the summit, according to Sooklal.

“This will be the largest gathering in recent times of countries from the Global South coming together to discuss the current global challenges,” he said.

Russian drones hit Danube port key to Ukraine grain exports

Russian drones struck a Ukrainian port on the Danube River, driving global wheat and maize prices higher as Moscow continues its campaign to cripple Kyiv’s ability to export food.

The attack damaged grain storage facilities, a fuel tank and administrative buildings in the Odesa region in southwestern Ukraine, officials said on Wednesday. Izmail, one of Ukraine’s biggest river terminals near the border with Romania, was the worst hit, although it continued to operate.

“Russian terrorists again were attacking ports, grain, global food security,” Ukrainian President Volodymyr Zelensky said on Telegram. “The world has to react. When civilian ports are targets, when terrorists deliberately destroy even silos — this is a threat to everyone on all continents.”

The price of wheat futures trading in Chicago jumped by as much as 4.9%, the biggest intraday gain in a week, before retreating. Maize futures also rose.

Russian President Vladimir Putin is coming under intensifying international pressure to return to negotiations to resume a deal that allowed Ukraine to export grain through a safe corridor on the Black Sea.

Instead, he has stepped up attacks on Danube ports. Last month his forces hit Reni, which along with Izmail and Ust-Dunaisk are increasingly important to Ukraine’s attempt to circumvent the Russian blockade by sending grain via the Danube to be shipped from Romanian territorial waters.

“These are the ports that have become the staple of global food security,” Infrastructure Minister Oleksandr Kubrakov said on Facebook.

Ukraine shot down 11 of the 25 Iranian-made drones launched at the Odesa region overnight, Governor Oleh Kiper said in televised remarks. According to Kubrakov, Izmail suffered most as missiles hit storage and silos with almost 40,000 tonnes of grain bound for Africa, China and Israel, as well as the infrastructure of the Ukrainian Danube fleet, “Ukraine’s key shipper in the Danube.”




More Russian oil trades above G7 price cap despite sanctions

Several of Russia’s refined oil products are trading above the price cap imposed by the Group of Seven (G7) nations, in another sign that the value of its barrels is rising in defiance of sanctions.

Since February, there have been two caps on the sale of Russian refined fuels, one for higher-value products at $100 a barrel and another for lower ones at $45. Argus Media, whose prices are central to the caps, says naphtha and fuel oil are trading above the lower cap, while diesel is trading above the higher one.

Of the products that are yet to breach the cap at Russia’s western ports, gasoil and petrol are both approaching that ceiling, with the value of both fuels surging globally.

Last month, Russia’s flagship Urals crude breached the price cap for the first time, offering a victory of sorts for Moscow which assembled a shadow fleet of ships big enough to transport its supplies to buyers while circumventing G7 services.

Russia’s main oil flows signal output may finally be in sync with Opec+ pledge

Russia’s two most-watched oil indicators — seaborne exports and domestic crude processing — are finally signalling that the nation may be in full compliance with its Opec+ pledge to cut output.

Last month, a greater amount of crude was delivered to Russia’s refineries, but exports by sea fell even more. The net result was a combined daily volume for those two crucial flows of just under 8.6 million barrels.

That’s almost 490,000 barrels below February levels — closely matching Russia’s pledged production cut.

Earlier this year, Russia pledged to cut its crude production by 500,000 barrels per day from the February baseline. It will keep that reduction in place until the end of 2024 in an effort to stabilise the global oil market jointly with its partners in the Organisation of Petroleum Exporting Countries. It will also reduce exports by the same amount in August, without necessarily making additional production curbs. DM


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