Ukraine war news from March 3: Russian forces continue missile strikes, US unveils new sanctions on oligarchs

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Read more of the latest military briefing here.

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The UK is stepping up its capacity to deal with visa applications in anticipation of a growing number of refugees from Ukraine.

Security minister Damian Hinds told Sky News on Thursday that the country had received a “relatively small number” of visa applications so far, “but we expect that to grow rapidly . . . we are stepping up the capacity that we have”.

“In a normal circumstance 890 [visa] appointments are available in a week in that region, we are growing that, already it’s been [increased] to 3,000, it’s going to soon be at 6,000,” he added.

The number of refugees fleeing Ukraine following Russia’s invasion has reached 1mn, according to the UN.

Hinds said thousands of Ukrainians were eligible for the “extended family programme” and groups and individuals in the UK could sponsor refugees.

However, some MPs have argued that UK support for Ukrainian refugees is insufficient.

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ANA Holdings and Japan Airlines have cancelled flights to Europe over safety concerns after Russia invaded Ukraine, coming at a time that Japan has loosened border curbs.

Japan’s two largest airlines typically use Russian airspace for their European flights. Moscow introduced like-for-like sanctions in response to bans on its carriers, barring 36 countries from its airspace including all of the EU. Japan had resisted calls by the US to join such restrictions.

ANA cancelled several flights scheduled for Thursday and Friday, saying the flights, “on or after March 4 will be rerouted to take an alternate flight path. This will result in longer flight times, and there may be changes in departure and arrival times as well as delays.”

A JAL spokesman said: “We have decided to cancel the flights given the situation in Ukraine and having considered various risks.”

The rerouting will add to the headache for the airlines battered by the coronavirus pandemic by increasing fuel costs and limiting the amount of cargo that can be taken on board.

The cancellations come just as Japan, after months of relentless criticism from universities and businesses, is loosening its border rules by allowing 7,000 people a day from the current 5,000. It is exempting students from that count to allow for a larger intake to reduce a backlog of about 150,000 people.

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Global commodity prices hit the highest level since 2008 on Thursday as the Ukraine crisis intensified worries about global supplies of raw materials.

The S&P GSCI index, a broad measure of raw material prices, climbed 3.8 per cent in early London trading on Thursday, bringing its gains for 2022 to 37 per cent. West Texas Intermediate, the US oil benchmark, rose as high as $115 a barrel, a level it last struck 14 years ago.

Meanwhile, the price of natural gas traded in Europe climbed 4.1 per cent to €180 a megawatt hour, leaving it just below the record it touched on Wednesday.

Agricultural commodities have gained sharply in price, which is expected to increase the cost of food, particularly in developing economies. Wheat prices in Chicago have risen almost 40 per cent this year, while soyabeans are up 28 per cent.

The conflict in eastern Europe has had large consequences on the oil market, with big consumers beginning to shun Russian oil at a time when supplies globally are already low.

“Following Russia’s invasion of Ukraine, the US was clear that it wanted the flow of oil and gas to continue unabated,” said analysts at ANZ. “However, due to a combination of financial sanctions and the increasing reluctance of companies to do business with Russia, supply is being impacted.”

ANZ estimates 5mn barrels a day of Russian crude “could be struggling to find a buyer”.

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The UK has imposed fresh sanctions on the Russian and aviation and space industries, blocking them from buying insurance and reinsurance.

The move will bar Russian companies in those sectors from London’s insurance market, centred on Lloyd’s of London, which is a key global centre for aviation and space cover.

“In taking such action, the UK is demonstrating its commitment to apply severe economic sanctions in response to Russia’s invasion of Ukraine,” the UK Treasury said in a statement on Thursday.

It added: “Coupled with similar actions by the EU, this move further isolates Russia’s economy from the international financial system.”

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Vladimir Putin’s forces overran their first major Ukrainian city last night and unleashed heavy weapons fire on urban centres, driving the number of refugees who have fled the country to more than a million after eight days of war.

The reported seizure of Kherson, a provincial capital and Black Sea port, would mark a significant breakthrough for Russia’s southern campaign, which has made steady territorial advances unlike its northern offensive.

Its capture has yet to be confirmed by Ukraine’s military, but on Wednesday evening its mayor Igor Kolykhayev suggested Russian troops had secured the city.

Residents of Ukraine’s other frontline cities emerged from another night in bomb shelters to find further devastation from shelling and missiles, with the capital Kyiv hit by four huge explosions just before dawn.

Read more on Russia’s latest military assault here.

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The United Arab Emirates on Thursday said Ukrainians continue to be eligible for visas on arrival in the Gulf state, in an apparent about face on an earlier move to end visa waivers.

Faisal Lutfi, assistant under-secretary for consular affairs at the foreign ministry said in a statement that “Ukrainian nationals continue to be eligible for visa on arrival to the UAE”.

The clarification came after the Ukrainian embassy in Abu Dhabi had notified nationals that visa waivers had been withdrawn for visitors to the Gulf tourism and business centre from March 1.

More than a million Ukrainians have fled the war-torn country since Russia invaded last week.

The UAE is a popular tourism and employment destination for many Ukrainians and Russians. About 15,000 Ukrainians are resident in the country.

The UAE government initially had a neutral policy on the conflict, joining India and China in abstaining on last week’s UN Security Council vote condemning Russia.

But it voted in favour of a UN General Assembly resolution on Wednesday calling for Russia to withdraw its military.

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About 12,000 Indian nationals have been evacuated from Ukraine so far, according to Prime Minister Narendra Modi, and the Indian Air Force has now joined the rescue mission.

Modi told the Hindustan Times that increased flights and diplomatic efforts have meant India was “able to ensure the evacuation of about 12,000 Indians from Ukraine,” most of whom are students.

When Russia invaded last week, Indian officials said there were about 15,000 nationals in the country.

Modi added that “we have now engaged the Indian Air Force” and “around 30 flights will bring back Indians in the next few days”.

Thousands of Indians have crossed into neighbouring countries, including Romania, Poland, Moldova and Hungary, where the government has arranged flights to transport them to India.

A longstanding partner of Moscow, from whom it buys most of its weapons, New Delhi has abstained from UN votes condemning Russia. But it has also called for an end to violence, offered to broker peace talks, and sent humanitarian aid to Ukraine’s borders.

Modi has had two phone calls with Putin since the invasion started, while also speaking with Ukrainian president Volodymyr Zelensky, and European leaders. India’s diplomatic efforts have focused on trying to ensure safe passage out of Ukraine for its citizens, particularly from cities under Russian assault.

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The number of refugees pouring out of Ukraine to flee the fighting has doubled this week to hit 1mn since Russia invaded, the UN refugee agency reported.

“For many millions more, inside Ukraine, it’s time for guns to fall silent, so that life-saving humanitarian assistance can be provided,” said Filippo Grandi, commissioner of the UN High Commissioner for Refugees.

More than half of the refugees have travelled to Poland, with Hungary and Moldova among other key destinations. The UNHCR said nearly 50,000 refugees have gone to Russia.

An additional 96,000 people moved to the Russian Federation from the Donetsk and Luhansk regions between February 18 and 23, according to the international agency.

The UN and humanitarian partners co-ordinated emergency appeals for a combined $1.7bn to deliver humanitarian support to people in Ukraine and refugees in neighbouring countries.

The UN estimated that 12mn people inside Ukraine will need relief and protection, while more than 4mn Ukrainian refugees may need protection and assistance in neighbouring countries in the coming months.

“Families with small children are hunkered down in basements and subway stations or running for their lives to the terrifying sound of explosions and wailing sirens,” UN humanitarian chief Martin Griffiths said.

“Casualty numbers are rising fast. This is the darkest hour for the people of Ukraine,” he added. “We need to ramp up our response now to protect the lives and dignity of ordinary Ukrainians. We must respond with compassion and solidarity.”

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The London Stock Exchange has suspended trading in 27 companies with strong ties to Russia as the impact of sanctions rippled through global financial markets.

The companies include EN+, Sberbank, Gazprom, Lukoil and Polyus.

The LSE said the move was in connection with “events in Ukraine, in light of market conditions, and in order to maintain orderly markets.”

Earlier this week the Financial Conduct Authority, the UK markets regulator, suspended the London quote for VTB. Many Russian companies trade in London as depository receipts, which represent shares in overseas companies while the issuer holds the underlying shares in the company’s home market. However, the LSE’s list also included Fix Price, the discount retailer that is traded on the main market.

On Monday, Deutsche Borse halted trading in 16 companies while Nasdaq and the New York Stock Exchange temporarily halted trading in some companies with strong ties to Russia.

The suspension will come into immediate effect, the LSE added.

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Oil shot to its highest level in more than nine years and wheat prices climbed above $11 a bushel for the first time since 2008, amid indications that Russian forces had seized the city of Kherson in southern Ukraine.

Brent crude rose as much as 4.7 per cent to $118.22 a barrel, the highest level since February 2013, putting the global benchmark about 50 per cent higher for the year. West Texas Intermediate, the US marker, jumped as much as 3.7 per cent to $114.70.

“The market’s ability to access crude from the region because of sanctions or a risk of outright supply losses look set to persist for a prolonged period, given the realities on the ground,” said Louise Dickson, senior oil market analyst at Rystad Energy.

Boycotts of Russian suppliers have also hit natural gas, with European prices on Wednesday settling more than 40 per cent higher at €173 a megawatt hour.

Wheat futures traded in Chicago also rose, gaining as much as 13 per cent to $11.32 a bushel, as the conflict has severely disrupted shipments from Ukraine and Russia. The two countries account for almost a third of global exports.

Russian forces continued to bombard cities in Ukraine on Thursday as media reports indicated troops had entered the city hall of Kherson, potentially marking the first provincial capital to fall during the invasion.

Equity markets in Asia rose after Jay Powell, US Federal Reserve chair, indicated the US central bank would raise interest rates this month. Japan’s benchmark Topix was 1.4 per cent higher while Hong Kong’s Hang Seng index climbed 0.3 per cent.

Read more about market movements.

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The Australian government says it is ready to export coal to Poland, but has warned European investors and insurers’ large-scale divestment from the country’s coal sector will limit its ability to ramp up supply.

Polish prime minister Mateusz Morawiecki said on Wednesday he wanted to stop coal imports from Russia in response to the Ukraine invasion, suggesting it could fill the gap with Australian coal.

Poland is heavily dependent on coal to generate its electricity.

Australian resources minister Keith Pitt said the government was “facilitating access to Australian thermal coal producers to interested parties as they seek alternative supplies from Russia”.

He said Australia’s coal producers had told him they were “willing to help our friends and allies if they can”.

But he added: “It is unfortunate that the biggest impediment to Australia boosting its coal production and helping our friends overseas is the withdrawal of support by international financial institutions and insurance companies, many of them based in Europe.”

Miners cast doubt over Australia’s ability to redirect any coal to Europe, saying supply was already tight and there was limited capacity to boost production.

Two separate coal miners, who asked not to be named, said the industry increasingly struggled to finance new coal projects, and that the approval process even for mine extensions could take years.

European companies are not the only ones to divest from coal. Australia’s big four banks, several major pension funds and the three biggest insurers have announced plans to exit the thermal coal sector over the next decade or so, leaving operators with limited options to raise capital or insure mines.

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Tech giant Amazon will support Ukraine’s cybersecurity as it battles a physical and online invasion from Russia, the company’s chief executive said on Wednesday.

“Amazon stands with the people of Ukraine, and will continue to help,” Andy Jassy wrote on Twitter.

“We’re supporting humanitarian relief on the ground with cash donations from Amazon and our employees, logistics to get supplies to people needing them, and cybersecurity assistance to companies and governments,” he said.

Russia is suspected by Kyiv of orchestrating several cyberattacks on Ukrainian institutions before and during its invasion. Several Ukrainian government websites, including that of its parliament, have been targeted and some banking services were disrupted.

Netblocks, a group that tracks internet disruptions and shutdowns, said that among those attacked were Ukraine’s ministries of defence, foreign affairs and internal affairs, as well as state banks PrivatBank and Oschadbank.

Amazon had earlier pledged to donate up to $10mn for humanitarian efforts. “The situation in Ukraine is deeply concerning, and gets more so each day,” Jassy wrote.

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The UN General Assembly voted at an emergency session on Wednesday to demand an immediate halt to Moscow’s attack on Ukraine and the withdrawal of all Russian troops.

The resolution passed 141-5, with 35 abstentions.

“The message of the General Assembly is loud and clear: end hostilities in Ukraine — now; silence the guns — now; open the door to dialogue and diplomacy — now,” UN secretary-general António Guterres said in a statement after the vote.

Belarus, Syria, North Korea and Eritrea joined Russia in opposing the measure. Bassam Sabbagh, Damascus’s UN envoy, denounced the resolution.

“The presentation of the draft resolution today is accompanied by massive misinformation, campaigns to distort facts . . . which is not designed to search for a real solution to the crisis, but rather to demonise the Russian Federation,” he said before voting no.

Abstainers included China, India and South Africa.

“We remain firm in our conviction that differences can only be resolved through dialogue and diplomacy,” TS Tirumurti, India’s UN representative, said in a statement explaining its abstention.

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Index provider FTSE Russell said on Wednesday it would cut Russian equities from its widely tracked indices while MSCI said it would remove the “uninvestable” country from its emerging market benchmark.

FTSE Russell said it made the move after the escalation of sanctions by the EU, UK and the US on Russia following its invasion of Ukraine.

“Russia will be deleted from all FTSE Russell Equity Indices effective from the open on Monday 07 March 2022,” the index provider said in a statement.

“The independent advisory committees and other stakeholders were consulted on the treatment of Russia with regard to the escalating sanctions,” FTSE Russell said.

The decision by the Central Bank of Russia to temporarily suspend trading on the Moscow Exchange and prohibit non-resident investors from executing security sales was also a factor, it added.

MSCI said its reclassification would be “implemented in one step across all MSCI Indexes, including standard, custom and derived indexes, at a price that is effectively zero” as of March 9.

“MSCI received feedback from a large number of global market participants, including asset owners, asset managers, broker dealers, and exchanges with an overwhelming majority confirming that the Russian equity market is currently uninvestable and that Russian securities should be removed from the MSCI Emerging Markets Indexes,” it added.

Pressure had been mounting on index providers to remove Russian stocks and bonds from all their emerging market benchmarks, which have helped funnel billions of dollars into the Russian economy.

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Russia’s advance on the Ukrainian capital of Kyiv stalled on Wednesday, the US defence department said.

US secretary of state Antony Blinken said the US remained open to a diplomatic solution to the crisis in Ukraine but called on Russia to halt military operations in the country.

The Pentagon postponed a scheduled intercontinental ballistic missile test in an effort to reduce the chances that it would be “misconstrued” by Moscow just days after Vladimir Putin raised the alert level for his nuclear forces.

Military developments:

• The Pentagon said on Wednesday the Russian military had ratcheted up missile and artillery strikes on Kyiv over the past 24 hours but added that Russian troops had not made any “appreciable advances” on the capital since Tuesday.

• A US defence official said the Russian convoy that had been moving south towards Kyiv had effectively stalled, partly because of Ukrainian resistance and partly due to insufficient supplies of fuel and food to sustain soldiers.

• Russia’s defence ministry reported 498 of its troops had died in Ukraine, with a further 1,597 injured. Russian military claims cannot be independently verified.

Economic developments:

• Roman Abramovich has put Chelsea football club up for sale after 19 years of ownership, waiving £1.5bn it owes him and pledging to donate proceeds of the sale to victims of the war in Ukraine.

• Fitch cut its rating on Russia’s debt to “junk” status, the latest in a series of moves by credit rating agencies following the invasion of Ukraine and sanctions targeting the Russian economy.

• Galp Energia, Portugal’s dominant oil and gas operator, has joined other western utilities in boycotting Russian oil.

• The US announced it will curb exports of oil and gas equipment to Russia and advanced military technology to Belarus.

• Democrats in Congress urged US oil refineries to stop importing oil from Russia in an effort to ratchet up pressure on the Kremlin.

• The EU is discussing measures to prevent the use of cryptocurrencies to circumvent the sanctions on Russia.

• The Federal Reserve is prepared to push ahead this month with its first interest rate increase since 2018, despite a highly uncertain economic outlook as a result of Russia’s invasion of Ukraine, Jay Powell told US lawmakers.

• In stock markets, Europe’s Stoxx 600 share index added 0.9 per cent. The US benchmark S&P 500 closed 1.9 per cent higher and the technology-heavy Nasdaq Composite rose 1.6 per cent.

• Brent crude, the international oil benchmark, settled at $112.93 a barrel, up 7.6 per cent.

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Fitch cut its rating on Russia’s debt to “junk” status, the latest in a series of moves by credit rating agencies following the invasion of Ukraine and sanctions targeting the Russian economy.

Fitch downgraded Russia to B, which is five notches below investment grade, and placed the country on negative watch, suggesting its credit rating could be dropped further.

Russia was previously rated triple-B, or two notches above junk.

In a report published on Wednesday, Fitch said the severity of sanctions placed on Russia in response to its attacks on Ukraine “represents a huge shock to Russia’s credit fundamentals” and could “undermine its willingness to service government debt”.

“Developments will weaken Russia’s external and public finances, severely constrain its financing flexibility, markedly reduce trend GDP growth, and elevate domestic and geopolitical risk and uncertainty,” according to Fitch.

The rating agency said it placed Russia on negative watch due in part to the potential for further sanctions and uncertainty over Russia’s policy response.

The downgrade came after S&P lowered its own rating for Russia’s debt to junk last week. Meanwhile, Moody’s has put the country on review for a possible downgrade to junk status.

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Democrats in Congress are urging US oil refineries to stop importing oil from Russia in an effort to ratchet up the pressure on the Kremlin a week into the Russian invasion of Ukraine.

Bobby Rush, the Democratic chair of the House Energy Subcommittee, and Jerry McNerney, another Democrat on the subcommittee, have written to the refiners’ industry group calling on its members to stop purchasing Russian crude oil and partly refined products.

In the letter to the American Fuel and Petrochemical Manufacturers, which the Financial Times has seen, the two lawmakers wrote: “Because any purchases of Russian barrels would now finance its war with Ukraine, continuing this activity has become unconscionable.”

Separately, Jack Reed, the Democratic chair of the Senate Armed Services Committee, tweeted on Wednesday: “Russian oil imports should be stopped. Our domestic supply is sufficient.”

The US imported about 209,000 barrels a day of crude oil from Russia last year, or about 3 per cent of total imports, according to the AFPM. But it also imported another 500,000 barrels a day of other petroleum products, accounting for nearly two-thirds of all unfinished oil imported by US refineries, according to Rapidan Energy Group, a consultancy.

The most recent figures from the US Energy Information Administration show the country’s biggest purchasers of Russian oil include ExxonMobil.

Joe Biden, the US president, has said he is open to imposing an oil embargo on Russia. But as his officials debate the wisdom of doing so, many oil buyers are already moving to stop purchasing supplies from Russia.

Valero Energy, a Texas-based refining company which imports heavily from Russia, has reportedly suspended all future purchases of Russian oil. Russia’s Urals crude is now trading at a record discount of more than $18 a barrel as the country’s producers struggle to find buyers.

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Wall Street stocks rose and a powerful rally in debt markets reversed on Wednesday, as Federal Reserve chair Jay Powell signalled that the US central bank would raise interest rates this month despite economic uncertainty created by Russia’s invasion of Ukraine.

The S&P 500 share index ended the day 1.9 per cent higher, and the technology-heavy Nasdaq Composite rose 1.6 per cent. In Europe, the regional Stoxx 600 equity benchmark added 0.9 per cent.

The equity moves came as Brent crude oil climbed 7.6 per cent to $112.93 a barrel; Joe Biden, US president, hinted at further sanctions against Russia; European natural gas prices hit an all-time high; and data showed that eurozone inflation had surged to a new record.

Powell told US legislators on Wednesday that he still saw interest rate rises coming, starting with a 0.25 percentage point increase in March, but that the Ukraine conflict had injected “uncertainty” into the Fed’s outlook.

The two-year US Treasury yield, which closely tracks monetary policy expectations, rose 0.19 percentage points to 1.53 per cent, fully reversing the previous session’s drop, as traders accepted that the Fed would proceed with its intended monetary tightening to tamp down inflation. Bond yields move inversely to their prices.

Read more on today’s market moves here.

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US secretary of state Antony Blinken said on Wednesday the US remained open to a diplomatic solution to the crisis in Ukraine but called on Russia to halt military operations in the country.

“We of course remain open to pursuing any reasonable path, but it’s very hard to see any path when the bombs are dropping, the planes are flying, the tanks are rolling,” Blinken said on Wednesday. “De-escalation, pulling back forces, that would open the path to diplomacy.”

Blinken said he would fly to Brussels on Thursday to continue co-ordination with Nato and G7 allies to hold Russia to account and remind Putin that “an attack on any Nato member is an attack on all”.

He will then travel to Poland, which he said was hosting hundreds of thousands of Ukrainian refugees, and Moldova.

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