LYSYCHANSK, UKRAINE (REUTERS, AFP) - Ukrainian fighters were holding out on Thursday (June 9) in the eastern city of Sievierodonetsk despite relentless Russian shelling, the regional governor said, as Moscow presses an assault that both sides believe could help shape the war’s course.

Russia has concentrated its troops and firepower on the small industrial city to secure the surrounding province on behalf of Moscow-backed separatists. Ukraine’s forces pulled back to the city’s outskirts on Wednesday but have vowed to fight there for as long as possible.

The battle for the Ukrainian city of Sievierodonetsk is brutal and will determine the fate of the Donbas region, said the country’s president.

After failing to take control of the capital Kyiv, the Kremlin says it is now seeking to completely “liberate” Ukraine’s breakaway Donbas where Russian-backed separatists broke away from Ukrainian government control in 2014.

Around a third of the Donbas was held by the separatists before the Feb 24 invasion.

“This is a very brutal battle, very tough, perhaps one of the most difficult throughout this war,” Ukrainian President Volodymyr Zelensky said in a video statement on Wednesday.

“Sievierodonetsk remains the epicentre of the encounter in Donbas... Largely, that is where the fate of our Donbas is being decided now,” he added.

Artillery shelling has turned the city in Ukraine’s Luhansk province to a bombed-out wasteland. Luhansk’s regional governor, Serhiy Gaidai, said the centre of the town was being destroyed.

“Our fighters are hanging on in the Sievierodonetsk industrial zone. But fighting is going on not just in the industrial zone, but right in the city of Sievierodonetsk,” he told Ukrainian television late on Wednesday.

Gaidai said Russia now controlled more than 98 per cent of Luhansk, claimed by Moscow for its proxies who have held eastern parts of the region since 2014.

Moscow has been trying to encircle Ukrainian forces in the areas they still hold. Ukrainian forces still control all of Sievierodonetsk’s smaller twin city Lysychansk on the west bank of the Siverskyi Donets River but Russian forces were destroying residential buildings there, Gaidai said.

The strategic city has become the focus of Russia's offensive as it seeks to seize an eastern swathe of Ukraine, after being repelled from other parts of the country.

Earlier in the day, Gaidai had conceded that Ukraine's forces might have to pull back as Sievierodonetsk was being shelled by Russian troops "24 hours a day".

Moscow claimed on Tuesday it had full control of residential areas, while Kyiv was still holding the industrial zone and surrounding settlements.

Russia's offensive is now targeting the Donbas region, which includes Lugansk and Donetsk, after its forces were pushed back from Kyiv and other areas following the February invasion.

The cities of Sievierodonetsk and Lysychansk, which are separated by a river, were the last areas still under Ukrainian control in Lugansk.

Lysychansk remains fully under the control of the Ukrainian army but is under "powerful and chaotic" shelling, Gaidai said, accusing Russian forces of deliberately targeting hospitals and humanitarian aid distribution centres.

"The destruction is enormous," he added.

The fighting came as UN chief Antonio Guterres starkly warned the war's impact on the world was worsening.

The United Nation's secretary-general said on Wednesday that 1.6 billion people were likely to be affected as the consequences of Russia's invasion of Ukraine worsened.

"The war's impact on food security, energy and finance is systemic, severe, and speeding up," Guterres said.

He added that "for people around the world, the war is threatening to unleash an unprecedented wave of hunger and destitution, leaving social and economic chaos in its wake".

As concerns mounted over grain trapped at Ukrainian ports, Russian Foreign Minister Sergei Lavrov said Moscow was ready to ensure the safe passage of ships from Ukraine.

"We are ready to do this in cooperation with our Turkish colleagues," Lavrov told reporters in Ankara amid warnings of shortages worldwide partly blamed on Russia's invasion of Ukraine.

His Turkish counterpart Mevlut Cavusoglu called Russian demands for an end to sanctions to help grain onto the world market "legitimate".

"If we need to open up the international market to Ukrainian grain, we see the removal of obstacles standing in the way of Russia's exports as a legitimate demand," he said.

However Kyiv, which was not represented at the Ankara talks, pushed back against claims that Western sanctions on Moscow had sent prices soaring.

"We have been actively communicating, the president and myself, about the true cause of this crisis: it is Russian aggression, not sanctions," Ukraine's Foreign Minister Dmytro Kuleba said.

Moscow's campaign in the pro-Western country has not only devastated crops and farming, but also disrupted crucial deliveries from Ukraine - one of the world's main grain producers.

'Millions' could die

Ukraine said on Wednesday it would not demine waters around the Black Sea port of Odessa to allow grain exports, citing the threat of Russian attacks on the city.

At the request of the UN, Turkey has offered its services to escort maritime convoys from Ukrainian ports, despite the presence of mines - some of which have been detected near the Turkish coast.

Both sides accuse one another of destroying agricultural areas, which could worsen global food shortages.

As he hosted Mediterranean ministers on the global food crisis, Italian Foreign Minister Luigi Di Maio warned "millions" could die unless Russia unblocked Ukraine's ports.

But Kremlin spokesman Dmitry Peskov rejected suggestions that grain stuck in Ukrainian ports was fuelling a global food crisis.

"As far as we know, there is much less grain than the Ukrainians say. There is no need to exaggerate the importance of these grain reserves," he told reporters.

The war's economic impact continued to reverberate, with the World Bank cutting its global growth estimate to 2.9 per cent - 1.2 percentage points below the January forecast - due largely to the invasion.

The toxic combination of weak growth and rising prices could trigger widespread suffering in dozens of poorer countries still struggling to recover from the upheaval of the Covid-19 pandemic, the bank said.

"The risk from stagflation is considerable with potentially destabilising consequences for low- and middle-income economies," World Bank president David Malpass told reporters.

"For many countries recession will be hard to avoid," Malpass said.

The bank additionally announced US$1.5 billion (S$2 billion) more in aid for Ukraine, bringing the total planned support package to more than US$4 billion.

The OECD also warned the world economy would pay a "hefty price" for the Russian invasion as it slashed its 2022 growth forecast and projected higher inflation.

'Bombings every day'

Sievierodonetsk appeared close to being captured just days ago but Ukrainian forces launched counterattacks and managed to hold out, despite warnings they were outnumbered by superior forces.

Lanny Davis, a US lawyer for Ukraine tycoon Dmytro Firtash, said 800 civilians had taken refuge in the bunkers inside his huge Azot chemical plant in the city.

The situation was also increasingly desperate in Lysychansk.

"Every day there are bombings and every day something burns. A house, a flat... And there is nobody to help me," 70-year-old Yuriy Krasnikov told AFP.

"I tried to go to the city authorities, but nobody's there, everyone has run away." Ivan Sosnin was among those residents who decided to stay despite the war.

"This is our home, that's all we know. We grew up here, where else should we go?" said the 19-year-old.