Russia won’t accept a new Black Sea truce, saying the West already broke its word once

In a recent development, Russia has refused to accept a proposed truce in the Black Sea region, stating that the West had previously broken promises. On August 7, Maria Zakharova, a spokesperson for Russia's Foreign Ministry, disclosed that Moscow had not received an official proposal for a moratorium on strikes in the Black Sea.

The proposal, reportedly delivered by an intermediary, was likely from Turkey, which had previously stated on August 8 that it had sent a moratorium proposal to both sides in the conflict. Zakharova emphasized that Moscow does not deem the proposal acceptable due to its perceived half-measures and lack of guarantees from the West.

Russia had previously agreed to a moratorium in 2022-2023, contingent on the West lifting sanctions and granting access to global markets for its agricultural products. However, Russia claims the West did not fulfill its end of the bargain. As tensions rise, with both sides intensifying attacks on merchant vessels and ports, the potential for a Black Sea truce has once again come under discussion. In recent weeks, Russia has targeted ports in the Odesa region, and no grain vessels have entered those ports since late July.

The largest Black Sea port and one of Russia's most crucial grain export hubs, Novorossiysk, has been significantly affected by recent strikes. Ukraine carried out a substantial strike on August 12, halting operations at all of Novorossiysk's terminals, which have a combined capacity of 26.1 million metric tons. The Novorossiysk Grain Terminal, Novorossiysk Grain Products Plant, and KSK Grain Terminal collectively accounted for 90% of Ukraine's grain exports, which are predominantly transported by sea.

As a result, grain shipments decreased to about one-third of the normal volume, or 463,000 metric tons, according to Ukrainian Agriculture Minister Taras Vysotskyi. If the situation persists, Ukraine could exhaust its storage capacity for the new harvest by November, potentially leading to a 25-30% rise in global food prices.

Given Ukraine's status as one of the world's largest grain producers and the fact that 90% of its grain exports are maritime, the ongoing strikes could have far-reaching consequences for the global market. Russia, being the world's largest wheat exporter, would also be impacted by the disruptions at Novorossiysk, as the Russian Union of Grain Exporters and Producers warned that the shortfall in Russian wheat deliveries this season could reach 30-35 million metric tons, or approximately 15% of global wheat trade.

The only viable solution to make up for the lost volumes seems to be procuring supplies from other exporters, which may prove to be an impractical option. Wheat futures in Chicago surged by about 3% on August 12 following the attack on the Novorossiysk terminals.