Russian gas cut to Europe hits economic hopes after Ukraine grain deal

KYIV, July 26 (Reuters) – Russia said it will cut gas supplies to Europe from Wednesday in a blow to countries that have supported Ukraine, just as there were hopes that economic pressures could ease after Russia agreed to let Ukraine export grain from Black Sea ports.

The first ships from Ukraine may set sail in days under a deal agreed on Friday, the United Nations said, despite a Russian missile attack on the Ukrainian port of Odesa over the weekend.

Soaring energy costs and the threat of hunger faced by millions in poorer nations show how the biggest conflict in Europe since World War Two, now in its sixth month, is having an impact far beyond Ukraine.

The Ukrainian military on Tuesday reported Russian cruise missile strikes in the south, and that Ukrainian forces had hit enemy targets. Russia’s defense ministry did not immediately reply to an out-of-hours request for comment.

President Vladimir Putin warned the West earlier this month that sanctions risked triggering huge global energy price rises.

Russian energy giant Gazprom (GAZP.MM), citing instructions from an industry watchdog, on Monday said gas flows to Germany through the Nord Stream 1 pipeline would fall to 33 million cubic metres per day from Wednesday.

That is half of the current flows, which are already only 40% of normal capacity. Prior to the war, Europe imported about 40% of its gas and 30% of its oil from Russia. read more

The Kremlin says the gas disruption is the result of maintenance issues and Western sanctions, while the European Union has accused Russia of energy blackmail.

Germany said it saw no technical reason for the latest reduction.

Adding to concerns on the energy front, the Ukrainian state pipeline operator company said Russian gas giant Gazprom (GAZP.MM) without prior notice has increased pressure sharply in a pipeline that runs through Ukraine to deliver Russian gas to Europe. read more

Such pressure spikes could lead to emergencies including pipeline ruptures, and pipeline operators are obliged to inform each other about them in advance, the Ukrainian company said. Gazprom could not be immediately reached for comment.

Gazprom had estimated that it supplied 41.7 million cubic metres (mcm) through that pipeline on Monday versus 41.2 mcm a day earlier.

Ukrainian President Volodymyr Zelenskiy warned that the Kremlin was waging an “open gas war” against Europe.

Politicians in Europe have repeatedly said Russia could cut off gas this winter, a step that would thrust Germany into recession and hurt consumers already hit by soaring inflation.

Moscow says it is not interested in a complete stoppage of gas supplies to Europe.

GRAIN SHIPS

Before the invasion and subsequent sanctions, Russia and Ukraine accounted for nearly a third of global wheat exports.

Officials from Russia, Turkey, Ukraine and the United Nations agreed on Friday there would be no attacks on merchant ships moving through the Black Sea to Turkey’s Bosphorus Strait and on to markets. read more

Russian gas cut to Europe hits economic hopes after Ukraine grain deal