Ukraine blamed Russia for blowing up a giant dam and unleashing millions of gallons of floodwater across its south, complicating fierce fighting as Kyiv’s forces intensify their counteroffensive to oust Moscow’s troops from occupied territory.

The Kremlin denied responsibility and said Ukraine was behind the blast at the Kakhovska hydroelectric plant early Tuesday as the torrent of water threatened to make tens of thousands of people homeless and renewed fears for the safety of Europe’s largest nuclear power station. Wheat prices jumped, while a separate blast on an ammonia pipeline shut down in the war underscored the vulnerability of key infrastructure as the fighting enters a critical new phase.

Since Russia’s invasion of Ukraine in February 2022, the dam has been seen as a potential target for its strategic importance. It supplies the cooling reservoir for the Zaporizhzhia nuclear plant and feeds into water reserves in the Crimea peninsula, annexed by Russia in 2014. Ukrainian President Volodymr Zelenskyy warned in October that Russia had mined the dam and would explode it to pre-empt an offensive aimed at reclaiming occupied southern and eastern regions of the country.

Z elenskyy summoned his national security and defense council to discuss the damage as officials moved to evacuate people from dozens of towns and villages in southern Ukraine including the city of Kherson along the Dnipro river. Russian forces in Kherson region dug in on the opposite bank continued shelling flooded settlements as evacuation efforts were under way, Ukrainian Interior Minister Ihor Klymenko said in televised comments.

Russia “categorically” denies any involvement in the destruction of the dam, which was sabotaged by the Ukrainian side, Kremlin spokesman Dmitry Peskov told reporters, according to the Interfax news service.

The Kremlin’s claims “are nonsense,” Ukrainian security council Secretary Oleksiy Danilov said.

European leaders condemned Russia. German Chancellor Olaf Scholz said the damage to the dam was “something that has a new dimension but that fits with the way Putin is waging this war,” while Poland called for “further, severe sanctions” and NATO Secretary General Jens Stoltenberg said the blast “exposes the brutality of Russia.”

Fighting has spread along the front lines in recent days in the east and south of Ukraine. The flooding will force Russian troops on the other side of the Dnipro to retreat, which may reduce the intensity of shelling against territories Ukraine controls, Ukrainian southern military spokeswoman Nataliya Humenyuk said in televised remarks on the Radio Liberty website.

The situation at the nuclear plant that’s occupied by Russia is under control, Ukrainian Prime Minister Denys Shmyhal told a government meeting, according to a video on his Telegram channel.

There’s “no immediate risk to the safety of the plant,” though it’s “vital” that the cooling pond remains intact, International Atomic Energy Agency chief Rafael Grossi said in a statement.

Ukraine separately reported Russian shelling damaged the ammonia pipeline in the Kharkiv region close to the border between the countries. Russia regards the pipeline, which was closed down after the war began, as a key issue in talks on maintaining grain shipments through the Black Sea corridor.

While crops aren’t directly at risk, wheat prices surged as much as 3% on Tuesday over supply concerns, extending their climb from a 30-month low last week. The dam’s destruction “looks like a big escalation with dire consequences and huge headline risk,” Andrey Sizov, managing director at agricultural consultant SovEcon, said in a tweet.

The possibility of Russia blowing up the Kakhovska plant has been fully factored into Ukraine’s military planning, Serhii Nayev, commander of the United Forces of the Armed Forces of Ukraine, told Ukrinform news website. Russia carried out another wave of missile attacks on Ukraine overnight, firing 35 cruise missiles that were all intercepted by air defenses, the Ukrainian General Staff reported on Facebook. Ukraine carried out 19 air strikes on Russian troop formations and attacked command posts, an ammunition depot and artillery positions, it said.

More than 80 settlements and Kherson city lie within the flood zone which could affect hundreds of thousands of people, Ukrainian Deputy Infrastructure Minister Mustafa Nayyem said on Twitter. The hydro power station, that Russia has decoupled from Ukraine’s grid, provides electricity to more than 3 million people and is a “crucial part of the country’s energy infrastructure,” he said.

There’s no risk of flooding in Crimea as a result of the damage to the dam, said Sergei Aksyonov, who heads the Black Sea peninsula Russia annexed from Ukraine in 2014, the Interfax news service reported. While reservoirs for drinking water are about 80% full, the flow into the canal delivering supplies to the region may decline and work is under way to minimize losses, he said.

—With assistance from Daryna Krasnolutska.