Toll hits 33 in strike; US pushes oil price cap

The death toll mounted to at least 33 people after Russian rockets hit an apartment building in the Donetsk region.

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 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.

(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. Ukrainian forces repelled several Russian assaults on the Slovyansk and Kharkiv axes, the Ukraine’s General Staff said in its morning update. The mayor of Mykolaiv reported on Telegram that powerful explosions hit the city overnight.

(All times CET)

EU Backs 1 Billion Euro Loan for Ukraine (10:45 a.m.)

European Union finance ministers agreed to provide Ukraine with a 1 billion euro ($1 billion) emergency loan to finance urgent needs. The payment is part of a new exceptional macrofinancial assistance package of 9 billion euros that the European Commission has been preparing since mid-May.

The EU decided to push through a portion of the full proposal as a back-up plan since the larger package is still stalled.

EU’s Simson: Save Energy Now to Avoid Shutdowns (10:36 a.m.)

The EU must start prioritizing saving energy this summer in order to avoid industry having to reduce power usage next winter, according to energy commissioner Kadri Simson.

“Pre-emptive saving — not only industry, but also households can change their behavior — means in the middle of the winter we might avoid a situation where there will need to be curtailment of some industrial sectors,” she said in an interview with Bloomberg Television.

Oil Sinks on Demand Concerns (8:25 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 around 2% to trade near $102 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.

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.

© 2022 Bloomberg

Leave a Reply

Your email address will not be published. Required fields are marked *