Russia bombards Ukraine ports, threatens ships, jolting world grain markets

• Moscow to consider vessels as having military cargo
• Putin accuses West of ‘perverting’ grain deal
• US wheat soars 8.5%, biggest jump since days after invasion

MYKOLAIV, Ukraine, July 20 (Reuters) – Russia struck residential buildings on Thursday in a third straight night of bombardments of Ukrainian ports and issued a new threat against Ukraine-bound vessels that the United States said meant Moscow might attack ships on the high seas.

Days after Russia abandoned a U.N.-brokered deal to let Ukraine export grain, new signals that Moscow was willing to use force to reimpose its blockade of one of the world’s biggest food exporters set global prices soaring.

Moscow says it will not participate in the year-old grain deal without better terms for its own food and fertiliser sales. The United Nations says Russia’s decision threatens the food security of the world’s poorest people.

Kyiv is hoping to resume exports without Russia’s participation, and said on Wednesday it was setting up an alternative route via the waters of its NATO-member neighbour Romania.

But no ships have sailed from Ukrainian ports since Moscow pulled out of the deal on Monday, and insurers have had doubts about whether they will be able to underwrite policies for trade in a war zone.

Since quitting the deal, Moscow has rained missiles down nightly on Ukraine’s two biggest port cities, Odesa and Mykolaiv. Thursday’s strikes appeared to be the worst yet, with local authorities in Mykolaiv reporting at least 19 people wounded.

Firefighters were battling a huge blaze at a pink stucco residential building in Mykolaiv, blasted into a ruin. Several other residential buildings there were also damaged.

Officials also said at least two people were injured in attacks in Odesa, where buildings were on fire.

In its most explicit threat yet, Russia’s military announced it would deem all ships heading for Ukrainian waters from Thursday morning to be potentially carrying weapons, and their flag countries as parties to the war on the Ukrainian side. It said it was declaring parts of the Black Sea to be unsafe.

Washington called this a signal that Moscow might attack civilian shipping, and said Russia was also releasing new mines into the sea.

“We believe that this is a coordinated effort to justify any attacks against civilian ships in the Black Sea and lay blame on Ukraine for these attacks,” White House National Security Council spokesperson Adam Hodge said.

WORLDWIDE SHORTAGES

U.S. wheat futures were up an additional 1.5% in the early hours of Thursday after jumping 8.5% on Wednesday, their fastest single-day rise since the initial days of Russia’s invasion in February last year.

Both Ukraine and Russia are among the world’s biggest exporters of grain and other foodstuffs. The United Nations says withdrawing tens of millions of tonnes of Ukrainian grain from the market would cause worldwide shortages.

Russia shut Ukraine’s ports last year in the early months after its invasion, but allowed them to reopen a year ago under the grain deal, with Turkey and the United Nations supervising inspections of vessels with Russian participation.

A parallel deal offered guarantees for Russia’s own food and fertiliser exports. Moscow says this has not been fully implemented. Western countries say Russia has had no difficulty selling its food, which is exempt from financial sanctions, and is trying to use its leverage to force other concessions.

In comments on Wednesday, Russian President Vladimir Putin accused the west of “perverting” the grain deal, while repeating a Russian offer to return to it if its demands are met.

Ukraine’s President Volodymyr Zelenskiy said in his nightly television address that Russia’s attacks on Ukraine’s ports proved that “their target is not only Ukraine, and not only the lives of our people”.

The ports hit that day held about a million tonnes of grain, he said.

“It is precisely that amount that should already have been delivered to consumer countries in Africa and Asia,” he said, adding that a terminal damaged on Wednesday held 60,000 tonnes of agricultural exports intended for shipment to China.

The escalation in the Black Sea comes as Ukrainian officials report a new attempt by Russia to return to the offensive on the ground this week in the northeast of Ukraine, where Kyiv says Moscow has massed 100,000 troops and hundreds of tanks.

Since last month, Ukrainian forces have been on the march in the east and the south, recapturing small amounts of territory in their first big counteroffensive since last year boosted by billions of dollars worth of new Western arms.

But the going has been slow so far, with the Ukrainians yet to reach Russia’s main defensive lines in occupied territory.

Reporting by Reuters bureaux, Writing by Peter Graff, Editing by Angus MacSwan