Ukraine Latest: Biden Worries Putin ‘Doesn’t Have a Way Out’

(Bloomberg) -- President Joe Biden said he’s worried that Russian President Vladimir Putin “doesn’t have a way out right now” of his war in Ukraine, after the U.S. leader signed into law a measure making it easier for Washington to send weapons and supplies to the government in Kyiv.

Congressional Democrats have drafted a Ukraine aid package worth almost $40 billion, which is larger than the $33 billion Biden requested from lawmakers last month. 

The European Union’s top executive flew to Budapest to break a deadlock on the bloc’s proposed embargo on imports of oil from Russia, which pushed down crude prices. Hungarian Prime Minister Viktor Orban, who’s been holding out against the measure, said some progress was made in the talks but “a lot more needs to be done.”

(See RSAN on the Bloomberg Terminal for the Russian Sanctions Dashboard.)

Key Developments

• Biden Signs Lend-Lease Act to Speed Weapons Delivery to Ukraine
• Draghi Has Started Unpicking Decades of Italian Ties to Russia
• Biden Team Sees Tilt to China Buoyed as Putin Falters in Ukraine
• Putin Invokes World War II Nazi Fight to Justify Invasion
• Russia’s Economy Facing Worst Contraction Since 1994
• Germany Comes to Grips With Its Hard-Power Role in Europe

All times CET: 

Oil Extends Slump as EU Softens Sanctions Plan (4:11 a.m.)

Oil extended its biggest drop in more than five weeks as the European Union softened its proposed sanctions on Russian crude exports and economic growth concerns weighed on sentiment across markets.

West Texas Intermediate futures fell toward $101 a barrel in Asian trading after sliding around 6% on Monday. The bloc will scrap a proposed ban on EU-owned vessels transporting Russian crude after objections from members including Greece. Talks on a sixth package of sanctions are continuing.

Japan Sanctions 141 Individuals (3:07 a.m.)

Japan imposed asset freezes on 141 more individuals and said it would ban trade with 71 entities over Russia’s invasion of Ukraine. The individuals include Russian Prime Minister Mikhail Mishustin and officials of separatist republics in the Donetsk and Luhansk regions, the government said.

Separately, Japanese Trade Minister Koichi Hagiuda told reporters a ban on Russian natural gas would be a “difficult step” for the world to take.

Read more: Japan’s Kishida Says Phasing Out Russian Oil to Take Time 

Biden Says Putin Is a ‘Very Calculating Man’ (1:35 a.m.)

Joe Biden said Vladimir Putin believed he could break up NATO and the European Union with the war in Ukraine, calling the Russian leader “a very, very, very calculating man.”

The U.S. president, speaking at a Democratic National Committee fundraising event near Washington, added “the problem I’m worried about now is that he doesn’t have a way out right now. I’m trying to figure out what we do about that.” 

Hungary Sees ‘Some Progress’ in EU Talks on Oil (10:15 p.m.)

Prime Minister Viktor Orban’s talks with the head of the European Union about proposed sanctions on Russian oil imports made “some progress,” though further talks are needed to assuage Hungary’s energy security concerns, according to the country’s foreign minister.

Orban, who is blocking EU sanctions citing Hungary’s reliance on Russian energy, hosted European Commission President Ursula von der Leyen in his office in Budapest on Monday evening for a working dinner.

“We made some progress, we could say we took a small step forward,” Foreign Minister Peter Szijjarto said in a Facebook video after the conclusion of the talks. “A lot more needs to be done, though, for us to potentially change our position.”

Democrats Weigh $40 Billion Ukraine Aid (10:05 p.m.)

Democrats have drafted a Ukraine aid package worth almost $40 billion and plan to vote on it this week without attaching Covid pandemic funding, according to two people familiar with the plans.

President Joe Biden told lawmakers to separate the two requests to avoid stalling the Ukraine money, according to one of the people. The House could vote as soon as Tuesday on the Ukraine package, which is larger than the $33 billion Biden requested from Congress last month. Lawmakers are adding $3.4 billion in military aid and $3.4 billion in humanitarian assistance.

Biden Signs Lend-Lease Act to Speed Weapons Delivery (9:21 p.m.)

Biden signed into law a measure designed to make it easier for the U.S. to send weapons and supplies to Ukraine. “Every day Ukrainians pay with their lives,” Biden said of Russia’s continuing attacks, adding the legislation would be another tool to aid the government in Kyiv.

The measure, which borrows its name from a law that ended the U.S. policy of neutrality ahead of World War II and stepped up support to the U.K. and other allies, cuts some red tape but does not include additional funding.

European Gas Drops as Russia Tries to Calm Clients (6:42 p.m.)

Natural gas prices in Europe fell by the most in three weeks as top supplier Russia tried to reassure buyers that they can keep paying for gas without breaching sanctions. 

Benchmark futures closed 7.8% lower and power prices also fell. In a letter seen by Bloomberg, Gazprom PJSC told European clients that a new order published by the Kremlin on May 4 “clarifies the procedure” set out in the initial decree demanding ruble payments for gas. 

Ukraine Says It Loses $170 Million Daily on Port Blockade (6:38 p.m.)

Ukraine is losing $170 million every day because of Russian military blocking its sea ports as the country’s export capacity has declined by more than half, according to Prime Minister Denys Shmyhal.

Seventy vessels remain blocked, including 10 in the port of Odesa, Shmyhal said during a trip to the city on the Black Sea coast together with European Council President Charles Michel, according to a statement on government’s website. 

U.S. Delivered Howitzers, Artillery Rounds, Official Says (6:24 p.m.)

At least 86 of the 90 M77 howitzers that the U.S. has committed to Ukraine have been delivered, and about 310 Ukrainian soldiers have been trained on their use, a U.S. defense official told reporters. About 60% of the promised 184,000 artillery rounds have arrived as well.

In addition, about 20 soldiers have been trained to operate the classified U.S. Air Force drone known as Phoenix Ghost, the official said.

On the ground, Russian forces continue to make only incremental advances in the Donbas region and none in the south toward Odesa, the official said.

U.S. to Lift Tariffs on Ukrainian Steel Amid Russian War (5:35 p.m.) 

The Biden administration announced it is lifting tariffs on Ukrainian steel for one year, a mostly symbolic move by the U.S. to boost the the war-torn country’s economy. The duties being suspended were put into place by former President Donald Trump, who in 2018 imposed a 25% tariff on all steel imports. 

U.S. Expands Sanctions on Russian Imports (3:04 p.m.)

The U.S. expanded its list denying Russia access to American products, imposing a license requirement on all exports, re-exports and transfers.

The Department of Commerce’s Bureau of Industry and Security published a list that now includes wood products and construction machinery, expanding the number of goods affected relative to what it first announced in February. The measures are consistent with existing EU restrictions on similar items.

Macron Invokes Versailles in Warning on Humiliating Russia (3:02 p.m.)

After an address that included a blistering condemnation of Putin’s invasion, the French president drew a separate historical parallel with Germany’s treatment under the post-World War I Versailles Treaty in warning about the risks of humiliating Russia.

“Tomorrow, we will need to build peace with both Ukraine and Russia around the table,” Macron told reporters after a speech to lawmakers in the European Parliament in Strasbourg. “The terms of the negotiation will be decided by Ukraine and Russia -- but this can’t happen while annihilating each other, or in humiliation.”

Russia’s Economy Facing Worst Contraction Since 1994 (2:12 p.m.) 

Russia is facing the deepest economic contraction in nearly three decades, with gross domestic product likely to shrink as much as 12% this year under pressure from sanctions imposed by the U.S. and its allies over the invasion of Ukraine, according to an internal forecast by the Finance Ministry. 

The government hasn’t given a public outlook yet and the Economy Ministry sees a 8% decline, according to people familiar with the estimates who spoke on condition of anonymity to discuss internal deliberations. The Finance Ministry’s figure would put the economic pain on par with the turmoil seen in the early 1990s, when Russia’s Soviet-era economy lurched toward capitalism with a contraction not seen since wartime. 

Ukraine Moves Forward EU Bid With Answers to Questionnaire (2:13 p.m.) 

Ukraine’s president submitted his government’s responses to a questionnaire on its EU accession, pushing ahead with the early stages of a process to clinch membership to the bloc for his country. The Commission’s von der Leyen said in a speech that Zelenskiy had dispatched more than 5,000 pages.

The process is still in the early stages and could take years. Accession requires the candidate country to adopt established EU law as well as to enact reforms -- including to its judicial and economic systems -- to meet the bloc’s criteria. The move also requires the unanimous approval of all EU members, the European Commission and the European Parliament.

Warsaw Protesters Throw Paint at Russian Ambassador (1:37 p.m.)  

Russia’s ambassador to Poland was doused with red paint in Warsaw during protests against the invasion. The envoy led a delegation planning to lay flowers at a memorial to Soviet Red Army troops who defeated Nazi Germany in World War II. He was confronted by demonstrators holding Ukrainian and Polish flags, as well as banners accusing Russia of committing war crimes in Ukraine. 

Russia condemned the incident. Russian Foreign Ministry spokeswoman Maria Zakharova said in a message on Telegram that the country won’t be “intimidated.” 

Russia Finds New Buyers For its Oil (12:33 p.m.)

Russia’s government expects its oil output to increase this month as the nation’s producers find new buyers. 

The country, which accounts for roughly 10% of global oil output, has seen production fall by more than 9% since the invasion of Ukraine. Russia has faced an unprecedented wave of economic sanctions, many of which didn’t directly target oil but nevertheless disrupted exports and domestic fuel demand. 

EU Set to Dilute Oil Sanctions Package (12:18 p.m.)

The European Union is set to weaken its sanctions package on Russian oil after a weekend of wrangling, though it aims to keep a key provision on shipping that would hinder Moscow’s ability to export its crude globally.

The bloc will drop a proposed ban on EU vessels from transporting Russian oil to third countries, while retaining a plan to prohibit insuring those shipments, according to documents seen by Bloomberg and people familiar with the matter.

Prohibiting European vessels from transporting Russian oil to any destination in the world would have further dented Moscow’s exports -- a vital source of hard currency.

Ukraine’s Grain Exports Fall Due to Fighting (12:16 p.m.)

Ukraine’s grain exports were far below normal levels in April as the war affected the operation of terminals and ports on the Black Sea, Agriculture Minister Mykola Solskyi said.

Ukraine normally could ship 5 million tons or more of grain monthly through its ports, Solskyi said. Grain exports in April totaled about 1.1 million tons, up 200,000 tons from the previous month due to added capacity at Danube ports.

(An earlier version corrected the size of the aid package approved by U.S. Democrats.)

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