Poland warns of potential refugee influx; Hungary urges EU to find solution to Lukoil standoff

Hungary called on the European Union to broker a solution with Ukraine after Kyiv decided to bar the transit of crude from a major Russian oil supplier.

Chinese Foreign Minister Wang Yi told his Ukrainian counterpart the time was “not yet ripe” for peace talks to end the war with Russia, even as Beijing puts forward its own proposals for an initiative that would include Moscow at the table.

Poland warns of potential refugee influx after Kremlin’s Ukraine power system attacks

Poland’s authorities warned of a potential influx of refugees from neighbouring Ukraine after Russian forces stepped up attacks on the nation’s energy sector and other critical infrastructure.

The Kremlin intensified strikes against Ukraine’s power system this year, triggering power cuts for households and industrial producers. Electricity rationing has been in force since March and on some days is only available for several hours.

“We have very clear signals that due to Russian aggression, there may be a large inflow in the fall and winter,” Dariusz Marczynski, director of the Interior Ministry’s Department for Protection of Civilians and Emergency Management, told legislators in Warsaw on Wednesday.

Since the outbreak of the war, more than 18 million Ukrainians crossed into Poland, according to the border guard service. Just under one million decided to stay in the European Union member state, with many finding jobs or establishing their own companies.

Read more: Germany, Poland ask EU to help pay for hosting Ukraine refugees

Ukrainian President Volodymyr Zelensky is seeking investment to build as much as one gigawatt of decentralised generating capacity in the coming months. In a move to step up with support for Kyiv, Poland and Moldova said earlier in July that they were looking for ways to help Ukraine boost its electricity security.

Hungary urges EU to find solution to Ukraine Lukoil transit

Hungary called on the European Union to broker a solution with Ukraine after Kyiv decided to bar the transit of crude from a major Russian oil supplier.

The European Commission convened a so-called trade committee meeting on Wednesday to discuss the standoff, which Hungary and Slovakia argued threatened their energy security.

Ukraine has hardened sanctions against Lukoil over Russia’s invasion, effectively prohibiting the company from using the war-torn country as a transit route for its product. Hungary and Slovakia, both landlocked nations that obtained exemptions from EU energy sanctions on Russia, get a third and more than 40% of their crude supplies from Lukoil, respectively.

The EU executive has started gathering evidence and will monitor oil flows, said Energy Commissioner Kadri Simson, warning about the Kremlin’s potential role in the escalating dispute.

“The most important aspect of this is that we have to be ready for a unilateral decision potentially made by Russia,” Simson said in an interview in Bucharest on Wednesday. “They are not a trustworthy trading partner.”

China tells Ukraine time not yet ripe for peace talks

Chinese Foreign Minister Wang Yi told his Ukrainian counterpart the time was “not yet ripe” for peace talks to end the war with Russia, even as Beijing puts forward its own proposals for an initiative that would include Moscow at the table.

Speaking during the first visit to China by Ukrainian Foreign Minister Dmytro Kuleba since Russia invaded his nation in 2022, Wang said a path laid out by Beijing together with Brazil in May for resolving the war had won “extensive support” around the world.

China believed the “resolution of all disputes must be achieved through political means”, Wang said, according to a government statement Wednesday.

“Recently, both Ukraine and Russia have sent signals to varying degrees that they are willing to negotiate,” he said. “We support all efforts that are conducive to peace and are willing to continue to play a constructive role in the cease-fire and war and the resumption of peace talks.”

China has cultivated a “no-limits” partnership with Russia and has sought to portray itself as a neutral actor that can help end the conflict.

But Kyiv’s US and European allies have accused China of serving as an economic lifeline for the Kremlin since its invasion began by providing it with technologies and parts for weapons used in the war.

Kuleba is on a four-day visit to China at the invitation of Wang. China’s top diplomat said his country would continue to expand grain imports from Ukraine and pledged to promote the “healthy and stable development” of bilateral ties.

Russia to spread Opec+ compensation cuts through 2024-2025

Russia plans to make extra crude production cuts to compensate for pumping above its Opec+ quota in October and November this year, then between March and September of 2025.

The compensation cuts would be made to account for overproduction that had occurred from April, Russia’s Energy Ministry said in a Telegram statement.

“Russia overproduced in June but every month starting from April, the output level has been decreasing,” according to the statement. “Russia will resolve the overproduction issue in July and will fully meet its requirements.”

The excess volume during the first six months of the year averaged 480,000 barrels a day, Opec said in a separate statement.

Russia, the largest crude producer among the Organization of Petroleum Exporting Countries and its allies, has also been one of the group’s principal laggards in implementing the supply agreement intended to shore up global prices.

Ever since the start of its cooperation with Opec, Russia has said it can’t cut production significantly in late autumn and winter due to the geology of its oil fields and climate conditions.

Estonia targets 4% of GDP for defence spending to deter Russia

Estonia plans to raise its defence spending to 4% of gross domestic product, one of the highest levels in Nato, over the next two years to buy ammunition and bolster national security after Russia’s invasion of Ukraine.

The Baltic nation announced its new goal following Defence Minister Hanno Pevkur’s meeting with his US counterpart, Lloyd Austin, in Washington on Tuesday.

“All the allies should increase their defence spending to 2.5-3% of GDP,” Pevkur said in a post on the X social media network.

The push comes amid growing worries in some parts of the alliance about a potential return of Donald Trump as US president following the November elections.

The Republican nominee has long complained that many members of the North Atlantic Treaty Organization spend less than their 2% target on defence. Now, his advisers are considering demanding that the commitment be raised to 3% of economic output.

The Baltic states and Poland have led the way in increasing defence spending since Moscow’s invasion of Ukraine as they share borders with Russia or its ally Belarus.

Hedge funds form group for another $2.6bn Ukraine deal

A group of hedge funds invested in Ukraine was organising ahead of debt-restructuring talks with the government to rework some $2.6-billion of GDP warrants, according to people with knowledge of the matter.

Funds including Aurelius Capital Management and VR Capital Group were part of the creditor group advised by Cleary Gottlieb Steen & Hamilton, the people said, asking not to be named because the information isn’t public.

Absent a restructuring deal, the cash-strapped government of Ukraine would be due to make two payments to warrant-holders in August — a consent fee and a payment covering the 2021 period, two of the people said.

The warrants have disbursements linked to Ukraine’s economic performance, providing creditors with payments if gross domestic product expansion exceeds certain levels. They were issued as a sweetener during a previous debt revamp in 2015, but were excluded from a recent $20-billion bond restructuring agreement in principle between holders of Ukraine’s international bonds and the government. DM