European Union member states are divided on plans for a 12th package of sanctions against Russia. New measures expected as early as next month are likely to include a ban on purchases of diamonds from Moscow and possibly a proposal to use the profits generated by frozen central bank assets to aid Kyiv.

But countries including Poland and the Baltic nations want to go even further, with sanctions also on liquefied natural gas and IT services. Meanwhile, Ukraine prepared to file a complaint to the World Trade Organisation over an import ban on its grain into Poland, Hungary and Slovakia, according to Deputy Economy Minister Taras Kachka.

Latest developments

• EU braces for tussle over 12th Russian sanctions package
• Ukraine to file complaint as EU neighbours impose grain ban
• Romania agrees to freeze on Ukraine grain exports to local market
• Zelensky to meet US senators with Ukraine aid under threat 
• Europe is better prepared if Trump wins, says Germany’s Baerbock

Russian diesel exports dip nearly a third so far in September

Russia’s diesel exports dipped by nearly a third in the first two weeks of September as output fell amid seasonal refinery maintenance and producers redirected more fuel to the domestic market following government efforts to ease prices.

In the first 13 days of the month, Russian oil companies exported some 63,000 tonnes of diesel per day, down by 31% from an average for the first 30 days of August, according to a person with knowledge of the matter. Diesel export data includes deliveries to foreign buyers via seaports and railways.

While most of the fuel usually remains at home, Russian producers have been increasing supplies to domestic clients amid government calls to stabilise fuel prices ahead of presidential elections scheduled for March next year. The issue has previously caused protests, such as in 2018 when consumers across Russia rallied to demand cheaper fuel.

EU braces for tussle over 12th Russian sanctions package

The European Union is gearing up for a fight over what should be included in its 12th package of sanctions over Russia’s war in Ukraine, as the Group of Seven moves ahead with a plan to ban purchases of diamonds from Moscow.

The new measures, which could be presented as early as next month, are likely to include the EU’s version of the upcoming G7 ban and possibly a long-awaited proposal to use the profits generated by frozen central bank assets to aid Kyiv, according to people familiar with discussions.

A group of member states, including Poland and the Baltic nations, want to go even further, said the people who asked not to be named on a confidential issue. The group has called for additional sanctions on LNG and IT services among the measures they would like to see in a fresh proposal, said the people.

The group of countries has also urged restrictions on Russia’s nuclear sector. But those attempts have been resisted many times before, as too many member states are opposed. Some countries argue there is little left to sanction, amid calls to ensure existing restrictions are enforced.

Poland wants to strengthen sanctions on some commodities adopted in previous packages, according to a document seen by Bloomberg News. Its proposals include lowering import quotas for synthetic rubbers, making steel restrictions more effective and introducing a ban on solid caustic soda. Warsaw is also seeking a new sanctions package against Belarus.

Earlier attempts to sanction Russian gems in Europe have met resistance from leading importer nations like Belgium, which argued that a simple ban without a global deal would just shift the lucrative gem trade elsewhere.

Ukraine to file complaint as EU neighbours impose grain ban

Ukraine moved to challenge unilateral grain-import bans imposed by three of its European Union neighbours and weighed retaliatory measures as the dispute between war-time allies escalated.

The government in Kyiv filed a complaint to the World Trade Organisation on Monday over measures taken by Poland, Slovakia and Hungary, Deputy Economy Minister Taras Kachka told Bloomberg. Ukraine was also considering measures that may affect products such as onions and apples from Poland and cars from Hungary if restrictions aren’t lifted by the end of Friday, he said.

“We are asking for acknowledgement that these actions are illegitimate,” Kachka said in an interview.

The three Ukrainian neighbours, some of which have been staunch supporters of the war-battered nation, defied the EU’s decision on Friday to end a ban on grain purchases, citing the impact on plummeting prices for their markets.

Ukraine is pushing its closest EU neighbours to open their markets to its grain, oilseed and sunflower oil, exports that provide vital revenue. The bans have been blamed for slowing the transit of Ukraine’s goods via those countries to other markets, routes that have become even more important after Russia terminated a Black Sea grain corridor agreement in July. Before the war, Ukraine exported millions of tonnes of crops through its southern ports.

The unilateral decision by eastern European governments was met with condemnation by other EU members, whose agriculture ministers met on Monday in Brussels.

Dutch defence staffer suspended over Russia sanctions evasions

The Dutch government suspended an employee over allegations that he evaded Russian sanctions.

The Dutch financial crimes agency said two men, including a 48-year-old defence ministry staffer, were suspected of circumventing sanctions by exporting aircraft parts to Russia by diverting them to other countries. The defence ministry had suspended the employee and would await the outcome of the legal process, a spokesperson told Bloomberg on Monday.

Documents, flash drives and ammunition were seized from the government employee’s home, according to the statement on Friday.

Crude oil premium in Russia returns as diesel’s allure grows

A global surge in diesel is benefiting one of Russia’s key export crudes, with the oil that’s pumped from the nation’s Far East trading at a rare premium to global benchmark Brent.

Espo, a diesel-rich grade typically favoured by the smaller, independent refiners in China, has climbed to a small premium to Brent for cargoes arriving next month, according to traders. That’s a reversal from earlier this year when it saw sizeable discounts amid the market upheaval that followed Russia’s invasion of Ukraine in 2022 as global buying patterns shifted.

Diesel is one of the hotter corners of the global energy market at present as refiners struggle to make enough of the key industrial fuel even as they benefit from healthy profit margins. At the same time, crude supply curbs imposed by Opec+ heavyweights Saudi Arabia and Russia aimed at lifting oil prices have curtailed the volume of denser, more sulfurous barrels that are typically used to produce the diesel that’s vital for industry and transport.

Russia’s Espo crude for October arrival in China traded at a premium of about 50 cents a barrel to Brent on a delivered basis, said traders, who asked not to be identified. That would be the highest since a price cap was introduced by Western nations, according to Viktor Katona, lead crude analyst at Kpler.

Kim Jong-un’s trip to Russia may help him put spy satellites in orbit

North Korean leader Kim Jong-un is returning from Russia with pledges to help with his space programme that could finally allow his country to reach its long-held goal of placing multiple satellites in orbit.

Kim was presented with options for cooperation when he met President Vladimir Putin last week at Russia’s Vostochny Cosmodrome space centre, including assistance in building satellites and firing them off on Russian rockets. The official Korean Central News Agency said on Monday that Kim had successfully completed “the schedule of his official goodwill visit to the Russian Federation”.

North Korea has tried seven times over the past 25 years to put a satellite in orbit — five of the missions crashed into the sea and two put something in space, albeit with questionable operating status. The assistance from Russia could help North Korea turn the corner, giving them eyes in the sky to monitor the movements of troops from the US and its allies in the region.

In exchange, North Korea could provide badly needed munitions for Putin’s war in Ukraine. The US has said a potential arms deal would be a focus of Kim’s visit. North Korea sits on vast stores of artillery shells and rockets that can work with Soviet-era weapons the Kremlin has deployed on the front lines.

Zelensky to meet US senators with Ukraine aid under threat

Top US Senate leaders will host an all-members meeting with Ukrainian President Volodymyr Zelensky on Thursday, according to a Senate leadership aide, as House Republicans are preparing to block a Biden administration request for another $24-billion in Ukraine assistance.

Zelensky is expected to meet President Joe Biden at the White House the same day, travelling to Washington after attending the United Nations General Assembly. He’s expected to seek renewed commitments from US leaders to help Ukraine’s fight to regain occupied land from Russia.

Chuck Schumer, the Democratic majority leader in the Senate, and Minority Leader Mitch McConnell are due to host the meeting on Capitol Hill.

Congress faces a 30 September deadline for the end of the fiscal year. Conservative hard-liners in the House have threatened to shut down the government if a budget deal includes additional aid to Ukraine.

Four top Senate Republicans urged Biden in a letter on Saturday to provide Ukraine with long-range ATACMS missiles. The letter rejects the argument by some conservatives that the aid dips too far into the US weapon supply, saying only a small part of US stockpiles would be needed.

Zelensky renewed his requests for additional weaponry in an interview with CBS News’ 60 Minutes broadcast on Sunday evening.

“And if Ukraine had enough of these modern systems, we would have already restored the territorial integrity of Ukraine,” he said, according to a CBS transcript. “We would have already done that. These systems exist.” DM