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Russia threatens to retaliate as Finland seeks to join NATO

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© Reuters. FILE PHOTO: Flags wave outside the Alliance headquarters ahead of a NATO Defence Ministers meeting, in Brussels, Belgium, October 21, 2021. REUTERS/Pascal Rossignol/File Photo

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By Anne Kauranen and Jonathan Landay

HELSINKI/KHARKIV, Ukraine (Reuters) – Finland said on Thursday it would apply to join NATO “without delay”, with Sweden expected to follow, as Russia’s invasion of Ukraine looked set to bring about the very expansion of the Western military alliance that Vladimir Putin aimed to prevent.

The decision by the two Nordic countries to abandon the neutrality they maintained throughout the Cold War would be one of the biggest shifts in European security in decades. Moscow called Finland’s announcement a direct threat to Russia, and threatened retaliation, including unspecified “military-technical” measures.

It came even as Russia’s war in Ukraine was suffering another big setback, with Ukrainian forces driving Russian troops out of the region around the second largest city Kharkiv, the fastest Ukrainian advance since forcing Russia to withdraw from the capital and northeast more than a month ago.

In Geneva, the U.N. Human Rights Council passed a resolution to set up an investigation into possible war crimes by Russian troops in the Kyiv area and beyond before they were driven out at the end of March, a move that Russia said amounted to political score-settling. [nL5N2X43LS]

U.N. High Commissioner for Human Rights Michelle Bachelet said there were many examples of possible war crimes, including unlawful killings and summary executions.

Moscow denies deliberately attacking civilians.

NATO Secretary-General Jens Stoltenberg said the Finns would be “warmly welcomed” and promised a “smooth and swift” accession process. French President Emmanuel Macron said he fully supported Finland’s choice to join the alliance.

Finland’s 1,300-km (800-mile) border will more than double the length of the frontier between the U.S.-led alliance and Russia, putting NATO guards a few hours’ drive from the northern outskirts of St Petersburg.

“Finland must apply for NATO membership without delay,” President Sauli Niinisto and Prime Minister Sanna Marin said in a joint statement.

Asked whether Finland’s accession posed a direct threat to Russia, Kremlin spokesman Dmitry Peskov said: “Definitely. NATO expansion does not make our continent more stable and secure.

“This cannot fail to arouse our regret, and is a reason for corresponding symmetrical responses on our side,” Peskov added.

Russia’s foreign ministry said Moscow would be forced to take “retaliatory steps, both of a military-technical and other nature”, giving no further details. Russian officials have spoken in the past about potential measures including stationing nuclear-armed missiles on the Baltic Sea.

‘YOU CAUSED THIS’

Asked on Wednesday if Finland would provoke Russia by joining NATO, Niinisto said: “My response would be that you caused this. Look at the mirror.”

Five diplomats and officials told Reuters that NATO allies expect both countries to be granted membership quickly, paving the way for an increased troop presence in the Nordic region to defend them during a one-year ratification period.

Putin, Russia’s president, cited NATO’s potential expansion as one of the main reasons he launched a “special military operation” in Ukraine in February.

NATO describes itself as a defensive alliance, built around a treaty declaring that an attack on one member is an attack on all, granting U.S. allies the protection of Washington’s superpower might including its nuclear arsenal.

Moscow regards that as a threat to its security. But Putin’s decision to invade Ukraine has changed Nordic public opinion, with many now embracing the view that Russia is a menace.

Finland in particular has centuries of uneasy history in Russia’s shadow.

Thursday also saw an intensification of disputes over Russian supplies of energy to Europe – still Moscow’s biggest source of funds and Europe’s biggest source of heat and power.

Moscow said it would halt gas flows to Germany through the main pipeline over Poland, while Kyiv said it would not reopen a pipeline route it shut this week unless it regains control of areas from pro-Russian fighters. Prices for gas in Europe surged.

COST OF THE WAR

Ukraine has spent 245.1 billion hryvnia ($8.3 billion) on fighting the Russian invasion, the finance minister said on Thursday, providing a glimpse into the scale of the spending on everything from buying and repairing weapons to emergency support for internally displaced people.

On the front lines, Ukraine has mounted a counter-offensive in recent days, ousting Russian forces from villages north and east of Kharkiv they had held since the start of the invasion.

Reuters journalists have confirmed that Ukraine is now in control of territory stretching to the banks of the Siverskiy Donets River, around 40 km (25 miles) east of Kharkiv. To the north, the Ukrainians have been pushing towards the Russian border. In the latest advance, they announced on Wednesday the recapture of the village of Pytomnyk, halfway to the frontier.

Ukraine’s general staff said the Russians were regrouping to prevent further Ukrainian advances near Kharkiv.

Russia’s retreat has begun to make it possible for some residents to return to recaptured villages around Kharkiv. But areas remain littered with mines and booby traps. The invasion has displaced more than 8 million people within Ukraine and the number of refugees who have fled the country now exceeds 6 million, U.N. data showed.

Commodities

Exclusive-Petrobras warned of diesel shortages before CEO ouster

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© Reuters. A worker paints a tank of Brazil’s state-run Petrobras oil company in Brasilia, Brazil September 30, 2015. REUTERS/Ueslei Marcelino/File Photo

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By Sabrina Valle

(Reuters) -Brazil’s Petrobras alerted the government last week that diesel pumps could run dry this year if the oil company does not sell fuels at market prices, according to four people close to discussions and an internal presentation seen by Reuters.

Just days later, President Jair Bolsonaro fired the chief executive of Petroleo Brasileiro SA, as the state-controlled company is formally known.

Bolsonaro’s chief of staff said the president is “anguished” by rising fuel prices and the pricing policy at Petrobras needs to be more aligned with the government’s thinking.

As Brazil enters a crucial window to secure diesel supplies, Petrobras management warned last week that the firm and other importers would struggle to secure diesel amid the most severe shortage of the fuel in 14 years, the sources said.

Analysts, private importers and officials at oil regulator ANP have echoed those concerns, said people familiar with the talks, who requested anonymity to discuss the politically sensitive matter.

The Petrobras presentation flagged the risk of shortage in the third quarter, when diesel demand surges seasonally in both the United States and Brazil, a major grains exporter expected to start shipping a bumper corn crop in August.

“If there is no signal of market prices ahead, there is material risk of a diesel shortage during the peak of demand during the harvest season, affecting Brazil’s GDP,” Petrobras said in the presentation titled “Fuels: challenges and solutions” and dated May 2022.

Petrobras did not respond to a request for comment.

Diesel supply has become a global concern since sanctions against Russia reshaped fuel trade and sent international inventories to historic lows. Importing countries are sizing up the risk of both rising costs and supply running short, as the industry shuts refineries for repairs or to cut carbon emissions.

Concerns in Brazil about diesel imports in the second half of the year rose after U.S. Gulf refiners, its major suppliers, started redirecting cargoes to Europe, two of the sources said.

“Global diesel inventories are far below the historic average,” Petrobras said in the presentation shared with the Ministry of Mines and Energy. “Petrobras alone cannot solve the global rise of energy prices.”

Energy Minister Adolfo Sachsida on Friday called oil analysts to ask about diesel shortages in the second half of the year, said a person directly involved in the matter. The ministry did not respond to a comment request.

“If Petrobras stops selling diesel at international prices for more than two or three weeks, there is a chance pumps will run dry,” a top executive from a large diesel producer said.

SUGGESTING SUBSIDIES

Executives at Petrobras, whose bylaws bar it from selling fuel at a loss without compensation, suggested in the presentation that Brazil could cut taxes or otherwise subsidize fuels to consumers, citing the example of several European Union nations.

Fuel subsidies cost Brazil about 7.5 billion reais ($1.6 billion) in 2018, when former President Michel Temer implemented them for a few months to halt a national trucker protest.

The cost of a similar measure this year could surpass 60 billion reais, estimated one of the people close to the discussions.

Russia’s invasion of Ukraine sent crude oil prices to a 14-year high. This month, global shortages led diesel traders to pay a premium of more than $50 per barrel.

At their maximum, Brazilian diesel inventories can cover about a month of national demand. At Petrobras, supplies are at about half capacity, according to two sources.

Brazil books cargoes in June for the August-October harvest season, when most grains reach port via long trucking routes.

The company has begun turning to more distant providers in Western Africa and India, one of the sources said. But while a Gulf diesel cargo takes two to three weeks to arrive in Brazil, a ship from India could take 45-60 days.

“If refineries in the U.S. get damaged during the hurricane season, or anything else contributes to a tighter market, we could be in real trouble,” a Petrobras executive said on condition of anonymity.

($1 = 4.79 reais)

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Commodities

Oil rises as tight supply counters economy fears and China curbs

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© Reuters. FILE PHOTO: A maze of crude oil pipes and valves is pictured during a tour by the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas, U.S. June 9, 2016. REUTERS/Richard Carson

By Alex Lawler

LONDON (Reuters) -Oil rose on Tuesday, recovering earlier losses, as tight global supply and an expected pick-up in fuel demand during the U.S. summer driving season balanced concerns over a possible recession and China’s COVID-19 curbs.

In a step that analysts say will further tighten the market, the European Union is moving closer to agreeing a ban on Russian oil imports. Such an embargo is likely to be agreed “within days”, Germany’s economy minister said on Monday.

Another source of support is U.S. gasoline demand. U.S. Memorial Day weekend travel is expected to be the busiest in two years as more drivers hit the road and shake off coronavirus lockdowns despite high pump prices.

“The oil market remains caught between fears of recession and the consequences of the zero-COVID policy in China on the one hand, and tight supply, especially of oil products,” Commerzbank (ETR:CBKG) analyst Carsten Fritsch said in a report.

Brent crude rose 44 cents, or 0.4%, to $113.86 a barrel by 1110 GMT. U.S. West Texas Intermediate (WTI) crude added 36 cents, or 0.3%, to $110.65.

Oil has surged this year, with Brent crude hitting $139 a barrel in March for its highest since 2008 after Russia’s invasion of Ukraine exacerbated supply concerns.

Even so, worries about threats to the global economy – a main theme of the Davos meeting taking place this week – limited gains and were behind price falls earlier on Tuesday.

“Global economic growth is declining precipitously under the collective impact of rising interest rates, Chinese COVID flare-ups and the European war,” said Tamas Varga of oil broker PVM.

Beijing is stepping up quarantine efforts to end its month-old outbreak while Shanghai’s prolonged lockdown is due to be lifted in a little more than a week.

Weekly U.S. inventory reports will be in focus later for a read on the strength of demand. Analysts expect gasoline and crude inventories to drop. The first report is from the American Petroleum Institute at 2030 GMT. [EIA/S]

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Commodities

Indian oil minister says oil at $110 a barrel not sustainable

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© Reuters. FILE PHOTO: India’s Minister of Petroleum and Natural Gas Hardeep Singh Puri speaks during an interview with Reuters in Abu Dhabi, United Arab Emirates, November 15, 2021. REUTERS/Abdel Hadi Ramahi

DAVOS, Switzerland (Reuters) – India’s Oil Minister Hardeep Singh Puri told the World Economic Forum in Davos on Tuesday that a crude oil price of $110 a barrel was not sustainable, as the world faces an energy price crisis which is contributing to rising global inflation.

Oil prices have surged this year, with Brent crude hitting $139 a barrel in March for its highest price since 2008, after Russia’s invasion of Ukraine exacerbated supply concerns. [O/R]

As countries around the world struggle with the impact of inflation on disposable income, India’s Commerce Minister Piyush Goyal said on the same WEF panel that food inflation in the South Asian country was at a “manageable level”.

Goyal also said that India was producing enough wheat for domestic consumption, as some countries face shortages due to price rises and problems in getting the grain from major producer Ukraine following Russia’s invasion.

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