Russia, Ukraine agree to avoid attacks on grain ships, energy infrastructure on Black Sea

In a significant diplomatic development, Russia and Ukraine have separately agreed to avoid military strikes on ships in the Black Sea and to collaborate on measures banning strikes on each other's energy infrastructure, the US announced on March 25 after talks in Saudi Arabia.

The White House statement confirmed that both nations "agreed to ensure safe navigation, eliminate the use of force and prevent the use of commercial vessels for military purposes in the Black Sea."

The statement also adds that the US will help to "restore Russia's access to the world market for agricultural and fertilizer exports, lower maritime insurance costs, and enhance access to ports and payment systems for such transactions."

Ukrainian Defense Minister Rustem Umerov, who was a member of his country's delegation in Riyadh, confirmed Kyiv had agreed to the partial ceasefire, specifying that it included attacks on Black Sea shipping and energy infrastructure.

He further said that Kyiv would view the movement of Russian military vessels beyond the eastern Black Sea as a violation.

Impact on grain trade

Although this agreement is a relief for Ukrainian exporters, market participants, mainly local traders, do not see this agreement as significantly changing the flow of Ukrainian grain exports.

"Honestly, I don't see big issues with the access of Ukrainian grains to the world via sea," a Ukrainian grain trader said.

A Kyiv-based corn exporter stated, "Our ports operated before this agreement, too. So what will change now?"

Ukraine continued to export grain through its own grain corridor established in August 2023, after Russia ended the Black Sea grain deal in July. Interestingly, Ukraine picked up its export pace and increased its grain shipments in 2024.

Another trader from Ukraine said, "Ukraine has been successful in using its own military-supported corridor in Ukraine waters since Russians pulled out of the earlier agreement," adding that these agreements would make no huge difference in the way the market is working.

Ukraine exported 12.7 million mt of wheat and 16.1 million mt of corn in marketing year 2024-25 as of March 20, Ukraine's agriculture ministry data showed. Analysts with S&P Global Commodity Insights forecast Ukraine's wheat exports to reach 15.6 million mt and corn exports 20.3 million mt in MY 2024-25.

Russia's grain exports have significantly increased since the onset of the war, with its wheat shipments hitting record levels at 55 million in MY 2023-24 (July-June), despite the war sanctions and restricted choice of insurers and financing options for exporters.

The country continued to export record monthly volumes at the beginning of MY 2024-25, driven by increased harvests and competitive prices.

According to analysts with Commodity Insights, Russia's wheat exports in MY 2024-25 totaled 33 million mt as of mid-March. The analysts forecasted Russian wheat exports at 43 million mt in MY 2024-25.

Platts, part of S&P Global Commodity Insights, assessed FOB Black Sea Russian 12.5% wheat at $253/mt March 25, down $2/mt day over day.