Ukraine expects a fresh assault by Russian ground forces, following widespread shelling which killed more than 30 people, as Kyiv's Western allies brace for a worsening of the global energy crisis if Russia cuts its supply of oil and gas.
Although the Kremlin has announced a pause in its assault after claiming victory in the eastern Luhansk region following the fall of Lysychansk, Russia's bombardment has continued throughout Ukraine.
Ukraine's general staff said the shelling across the country amounted to preparations for an intensification of hostilities as Russia seeks to seize the rest of the Donetsk region and control the entirety of the eastern Donbas industrial heartland.
Ukrainian President Volodymyr Zelenskyy said Russia had carried out 34 air strikes since Saturday, one of which hit a five-storey apartment building killing 31 people and trapping dozens.
Many Ukrainian cities, towns and villages have been left in ruins and the human cost of Russia's invasion, Europe's biggest conflict since World War II and now in its fifth month, mounts.
Just last week, the governor of Donetsk province urged its 350,000 remaining residents to move to safer places in western Ukraine.
In urging the evacuation, Donetsk Governor Pavlo Kyrylenko said it would allow the Ukrainian army to better defend towns, adding that about 80% of the region had departed by Monday.
“Once there are fewer people, we will be able to concentrate more on our enemy,” Kyrylenko said, adding that shelling had intensified and was “very chaotic”.
Attacks on key cities like Kramatorsk and Sloviansk have increased dramatically, killing and wounding scores of civilians weekly.
Observers say the two could end up like Sievierodonetsk and Lysychansk, cities now under Russian control after bombardment so ferocious that they are practically uninhabitable.
Fears of looming energy crisis escalate
Ukraine's allies have supplied it with arms and imposed tough sanctions on Moscow. The Kremlin, in turn, has used its vast oil and gas reserves to fund its war chest.
However, faultlines are beginning to emerge amongst Kyiv's allies as nations struggle with soaring energy and food prices and rising inflation.
Europe's dependence on Russian energy was worrying policymakers and businesses as the biggest pipeline carrying Russian gas to Germany began 10 days of annual maintenance. Governments, markets and companies are worried the shutdown might be extended because of the war.
Ukraine’s energy and foreign ministries said a decision by Canada to return a repaired turbine to Germany that is needed for the Nord Stream 1 gas pipeline which supplies Russian oil amounted to adjusting sanctions imposed on Moscow.
Zelenskyy warned the Kremlin would perceive exceptions to sanctions as a sign of weakness.
He said Moscow would now try to "completely stop the gas supply to Europe at the most urgent moment. This is what we need to prepare for now. This is what is being provoked now."
The global price of oil could surge by 40% to around $140 (€139.72) per barrel if a proposed price cap on Russian oil is not adopted, a senior US Treasury official said on Tuesday.
The goal is to set the price at a level that covers Russia's marginal cost of production so Moscow is incentivised to continue exporting oil, but not high enough to allow it to fund its war in Ukraine, the official said.
US Treasury Secretary Janet Yellen will discuss the implementation of the US price cap proposal and global economic developments with Japanese Finance Minister Shunichi Suzuki when they meet later on Tuesday, the official said.
Food prices on the rise as leaders seek solution to grain exports halt
As the European Union prepares to impose a phased embargo on Russian oil and ban maritime insurance for any tanker that carries it -- a move expected to be matched by the UK -- Yellen sees the cap as a way to keep oil flowing and avert a further price spike that could lead to a recession.
At the same time, Russian Finance Minister Anton Siluanov, in a newspaper interview published on Monday, strongly endorsed a proposal by gas producer Gazprom to expand its roubles-for-gas scheme for pipeline gas to include liquefied natural gas (LNG).
However, Kremlin spokesperson Dmitry Peskov told reporters no decisions had been taken nor orders prepared on such a move.
In March, Putin said "unfriendly countries" would have to pay for Russian gas in roubles, after Russia was cut off from the world financial system.
A number of Gazprom's biggest clients in Europe were cut off after refusing to cooperate with the roubles-for-gas payment scheme, while most European and western countries have openly declined to pay in converted roubles.
In an effort to ease global food prices, the international aim is to reopen Ukraine's Black Sea ports, which are shut by a Russian blockade, halting exports from one of the world's main sources of grain and threatening to exacerbate global hunger.
Together, Russia and Ukraine export nearly a third of the world's wheat and barley, more than 70% of its sunflower oil and are prominent suppliers of corn.
Turkish President Recep Tayyip Erdoğan, who has offered to mediate on the grain issue, discussed it with Putin by telephone. The Kremlin said the talks took place in the run-up to a Russian-Turkish summit scheduled for the near future.
A summit with Erdoğan would be Putin's first face-to-face meeting with a leader of a NATO country since the invasion and if it were to take place in Turkey, it would also be his first trip outside the territory of the former Soviet Union.