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Russia’s Oil and Gas Revenues Surged by 73.5% in January-May

June 11, 2024

Russia’s Oil and Gas Revenues Surged by 73.5% in January-May

Russia’s budget revenues from oil and gas soared by 73.5% in January-May of 2024 compared to the first five months of 2023, according to data from Russia’s finance ministry released on Monday.

Between January and May 2024, the revenues for the Russian federal budget from oil and gas hit $55.7 billion (4.95 trillion Russian rubles), per the data reported by Russian news agency TASS.

“In line with parameters of the socioeconomic outlook, a steady surplus of oil and gas revenues above their base level is also expected in months to come,” TASS quoted a statement from the ministry as saying.

Non-oil and gas revenues also rose, by 34% in January-May 2024 compared to the same period last year.

Russian oil revenues have been rising in recent months compared to the year-ago levels as Moscow is increasingly finding ways to circumvent sanctions and find buyers willing to risk purchasing its crude and refined petroleum products.

In April 2024, for example, Russia’s oil and gas revenues hit $13.5 billion (1.23 trillion Russian rubles), Russian finance ministry data showed in early May. The Kremlin received nearly double the oil income for the budget than it did in the same month of 2023.

The weaker Russian ruble and the higher price of Russia’s flagship Urals crude amid higher international oil prices contributed to higher revenues from oil-related taxes and from all total oil and gas sales, according to estimates by Bloomberg.

The doubled revenues from oil for Russia highlight the difficulties of the Western countries to reduce Putin’s income from oil, despite the price cap on Russia’s oil and the ramp-up of the sanctions enforcement in recent months.

Then in May 2024, Russia’s oil proceeds increased by almost 50% from a year ago, as Moscow continues to manage to circumvent sanctions and get a higher price for its crude.

Russia Confiscates €800 Million From Deutsche Bank, Unicredit And Commerzbank

May 21, 2024

Russia Confiscates €800 Million From Deutsche Bank, Unicredit And Commerzbank

After two years of being on the receiving end of a weaponized global reserve currency, getting booted from SWIFT, countless (toothless) sanctions and watching some $350 billion of its assets be frozen and soon confiscated, Moscow has had enough, and over the weekend the FT reported that a St Petersburg court seized around €800 million worth of assets belonging to three western banks – Deutsche Bank, Commerzbank and UniCredit.

The seizure marks one of the largest moves against western lenders since Moscow’s invasion of Ukraine prompted most international lenders to withdraw or wind down their businesses in Russia. It comes after the ECB told Eurozone lenders with operations in the country to speed up their exit plans.

According to court documents, the court seized €463 million-worth of assets belonging to Italy’s UniCredit, equivalent to about 4.5% of its assets in the country, according to the latest financial statement from the bank’s main Russian subsidiary.

Frozen assets include shares in subsidiaries of UniCredit in Russia as well as stocks and funds it owned, according to the court decision that was dated May 16 and was published in the Russian registrar on Friday.

According to another decision on the same date, the court seized €238.6mn-worth of Deutsche Bank’s assets, including property and holdings in its accounts in Russia. The court also ruled that the bank cannot sell its business in Russia; it would already require the approval of Vladimir Putin to do so. The court agreed with Rukhimallians that the measures were necessary because the bank was “taking measures aimed at alienating its property in Russia”.

…click on the above link to read the rest of the article…

Ukraine War Funding and Failed Russian Sanctions. Is the US Empire Shooting Itself in the Foot?

April 26, 2024

Ukraine War Funding and Failed Russian Sanctions. Is the US Empire Shooting Itself in the Foot?

*** 

This past weekend, April 20, 2024 the US House of Representatives passed a bill to provide Ukraine with another $61 billion in aid. The measure will quickly pass the Senate and be signed into law by Biden within days.

The funds, however, will make little difference to the outcome of the war on the ground as it appears most of the military hardware funded by the $61 billion has already been produced and much of it already shipped. Perhaps no more than $10 billion in additional new weapons and equipment will result from the latest $61 billion passed by Congress.

Subject to revision, initial reports of the composition of the $61 billion indicate $23.2 billion of it will go to pay US arms producers for weapons that have already been produced and delivered to Ukraine. Another $13.8 billion is earmarked to replace weapons from US military stocks that have been produced and are in the process of being shipped—but haven’t as yet—or are additional weapons still to be produced. The breakdown of this latter $13.8 amount is not yet clear in the initial reports. One might generously guess perhaps $10 billion at most represents weapons not yet produced, while $25-$30 billion represents weapons already shipped to Ukraine or in the current shipment pipeline.

In total, therefore, weapons already delivered to Ukraine, awaiting shipment, or yet to be produced amount to approximately $37 billion.

The remainder of the $61 billion includes $7.8 billion for financial assistance to Ukraine to pay for salaries of government employees through 2024. An additional $11.3 billion to finance current Pentagon operations in Ukraine—which sounds suspiciously like pay for US advisors, mercenaries, special ops, and US forces operating equipment like radars, advanced Patriot missile systems, etc. on the ground. Another $4.7 billion is for miscellaneous expenses, whatever that is.

…click on the above link to read the rest of the article…

Russia Is Struggling to Repair Refineries Due to Sanctions

April 5, 2024

Russia Is Struggling to Repair Refineries Due to Sanctions

Due to the sanctions, Russia cannot access spare parts from Western engineering companies that have provided refinery equipment in the past, leaving Russian refiners struggling to repair damaged units, multiple industry sources in Russia have told Reuters.

Western firms including America’s UOP and Swiss ABB have supplied parts and equipment to major Russian refineries in the past. After the invasion of Ukraine, they no longer fulfill new orders from Russia, leaving local engineers scrambling to find spare parts and equipment.

One example of such difficulty is Lukoil’s Norsi refinery in Nizhny Novgorod on the Volga River. A turbine malfunctioned there in early January and Russian engineers have struggled to have the equipment replaced since then, according to Reuters sources.

This has left the refinery with a reduced capacity to produce gasoline.

The malfunction at the refinery compounded last month after a fire broke out at the facility following a drone attack.

Since all major Russian refineries use at least some part of Western technology, they could struggle to repair equipment and units that broke down or have been damaged by Ukrainian drone attacks, which have intensified in recent weeks and have taken an estimated 14% of Russia’s refining capacity offline.

Russia claims it can repair all damaged units within two months.

On Wednesday, Russia’s Energy Minister Nikolai Shulginov said that all damaged refineries in the country would be restarted by the beginning of June.

“Repairs are underway at the refineries. We plan to re-launch a number of refineries after repairs in April-May, possibly before the beginning of June,” Russian news agency Interfax quoted Shulginov as saying.

“All facilities that were damaged will be re-commissioned,” the minister added.

…click on the above link to read the rest…

Iraqi parliament calling to ditch US dollar for oil trade

February 4, 2024

Iraqi parliament calling to ditch US dollar for oil trade

Washington has exercised strict control over Iraqi oil revenues for the past two decades

(Photo credit: INA)

The Finance Committee in the Iraqi parliament made a statement on 31 January calling for the sale of oil in currencies other than the US dollar, aiming to counter US sanctions on the Iraqi banking system. 

“The US Treasury still uses the pretext of money laundering to impose sanctions on Iraqi banks. This requires a national stance to put an end to these arbitrary decisions,” the statement said.

“Imposing sanctions on Iraqi banks undermines and obstructs Central Bank efforts to stabilize the dollar exchange rate and reduce the selling gap between official and parallel rates,” it added.

The Finance Committee affirmed its “rejection of these practices, due to their repercussions on the livelihoods of citizens,” and reiterated its “call on the government and the Central Bank of Iraq to take quick measures against the dominance of the dollar, by diversifying cash reserves from foreign currencies.”

Washington imposed sanctions on Iraqi Al-Huda Bank this week, under claims of laundering money for Iran. Several other banks have been hit with similar sanctions over the past year.

The statement came the same day a senior US Treasury official said Washington expects Baghdad to help identify and disrupt the funds of Iran-backed resistance factions in Iraq.

“These are, as a whole, groups that are actively using and abusing Iraq and its financial systems and structure in order to perpetuate these acts and we have to address that directly. Frankly, I think it is clearly our expectation from Treasury perspective that there is more we can do together to share information and identify exactly how these militias groups are operating here in Iraq,” the official stated. 

…click on the above link to read the rest…

Central Asia is the prime battlefield in the New Great Game

August 21, 2023

Central Asia is the prime battlefield in the New Great Game

So long as Russia and China remain the region’s dominant political and economic powers, the Central Asian heartland will remain a US and EU target for threats, bribes, and color revolutions.

Photo Credit: The Cradle

Samarkand, Uzbekistan – The historical Heartland – or Central Eurasia – already is, and will continue to be, the prime battlefield in the New Great Game, fought between the United States and the China-Russia strategic partnership.

The original Great Game pitted the British and Russian empires in the late 19th century, and in fact, never got away: it just metastasized into the US-UK entente versus the USSR, and, subsequently, the US-EU versus Russia.

According to the Mackinder-designed geopolitical game conceptualized by imperial Britain back in 1904, The Heartland is the proverbial “pivot of History,” and its re-energized 21st century historical role is as relevant as in centuries ago: a key driver of emerging multipolarity.

So it’s no wonder all major powers are at work in the Heartland/Central Eurasia: China, Russia, US, EU, India, Iran, Turkiye, and to a lesser extent, Japan. Four out of five Central Asian “stans” are full members of the Shanghai Cooperation Organization (SCO): Kazakhstan, Uzbekistan, Kyrgyzstan, and Tajikistan. And some, like Kazakhstan, may soon become members of BRICS+.

Map of Central Asia

The key direct geopolitical clash for influence across the Heartland pits the US against Russia and China on myriad political, economic, and financial fronts.

The imperial modus operandi privileges – what else – threats and ultimatums. Only four months ago, US emissaries from the State Department, Treasury, and Office of Foreign Affairs Control (OFAC) toured the Heartland bearing a whole package of “gifts,” as in blatant or thinly disguised threats. The key message: if you “help” or even trade with Russia in any way, you will be slapped with secondary sanctions.

…click on the above link to read the rest…

 

The Big Stiff: Russia-Iran dump the dollar and bust US sanctions

February 11, 2023

The Big Stiff: Russia-Iran dump the dollar and bust US sanctions

News of Russian banks connecting to Iran’s financial messaging system strengthens the resistance against US-imposed sanctions on both countries and accelerates global de-dollarization. 
https://media.thecradle.co/wp-content/uploads/2023/02/Iran-Russia-4.jpg

Photo credit: The Cradle
The agreement between the Central Banks of Russia and Iran formally signed on 29 January connecting their interbank transfer systems is a game-changer in more ways than one.

Technically, from now on 52 Iranian banks already using SEPAM, Iran’s interbank telecom system, are connecting with 106 banks using SPFS, Russia’s equivalent to the western banking messaging system SWIFT.

Less than a week before the deal, State Duma Chairman Vyachslav Volodin was in Tehran overseeing the last-minute details, part of a meeting of the Russia-Iran Inter-Parliamentary Commission on Cooperation: he was adamant both nations should quickly increase trade in their own currencies.

Ruble-rial trade

Confirming that the share of ruble and rial in mutual settlements already exceeds 60 percent, Volodin ratified the success of “joint use of the Mir and Shetab national payment systems.” Not only does this bypass western sanctions, but it is able to “solve issues related to mutually beneficial cooperation, and increasing trade.”

It is quite possible that the ruble will eventually become the main currency in bilateral trade, according to Iran’s ambassador in Moscow, Kazem Jalali: “Now more than 40 percent of trade between our countries is in rubles.”

Jalali also confirmed, crucially, that Tehran is in favor of the ruble as the main currency in all regional integration mechanisms. He was referring particularly to the Russian-led Eurasian Economic Union (EAEU), with which Iran is clinching a free trade deal.

…click on the above link to read the rest…

How Europe’s Energy Crisis Could Turn Into A Food Crisis

November 22, 2022

How Europe’s Energy Crisis Could Turn Into A Food Crisis

Runaway energy inflation has taken a toll on European industry, but another threat is looming.

  • Europe’s two biggest fertilizer suppliers, Russia and Belarus have retaliated against European sanctions by cutting off fertilizer exports.
  • The fact remains that the global food chain, especially its European links, is not in a good place right now.

Runaway energy price inflation has wreaked havoc on European industrial activity, with the heaviest consumers taking the brunt. Aluminum and steel smelters are shutting down because of energy costs. Chemical producers are moving to the United States. BASF is planning a permanent downsizing.

There is, however, a bigger problem than all these would constitute for their respective industries. Fertilizer makers are also shutting down their plants. And fertilizer imports are down because the biggest suppliers of fertilizers for Europe were Russia and Belarus, both currently under sanctions.

Both countries have retaliated against the sanctions by cutting off exports of fertilizers to Europe, and European officials repeating that fertilizer exports are not sanctioned is not really helping.

Russia accounts for 45 percent of the global ammonia nitrate supply, according to figures from the Institute for Agriculture and Trade Policy cited by the FT. But it also accounts for 18 percent of the supply of potash—potassium-containing salts that are one of the main gradients of fertilizers—and 14 percent of phosphate exports.

Belarus is a major exporter of fertilizers, too, especially potash. But Belarus has been under EU sanctions since 2021 on human rights allegations, and unlike Russia, it has seen its fertilizer industry targeted by these sanctions. This has made for an unfortunate coincidence for Europe and its food security.

…click on the above link to read the rest…

Oil Prices Are Primed To Spike This Winter

November 9, 2022

Oil Prices Are Primed To Spike This Winter

  • The EU embargo on seaborne Russian crude oil exports and the G7 price cap on Russian oil are both less than a month away.
  • While a global economic slowdown and weak oil demand in China have capped prices, looming supply disruptions will likely send oil prices higher.
  • A lack of refinery capacity and crude oil disruptions will drive the price of fuels higher as well, particularly the price of diesel.

Less than a month from now, an embargo on seaborne Russian crude oil exports to the European Union will come into effect. As a result, global oil supply is set to tighten considerably as Russia is the biggest oil and fuels exporter in the world. And the market is preparing.

Hedge funds once again like oil, and are buying it on the futures market in considerable volumes, according to Reuters’ John Kemp. Last week, the buying reached 22 million barrels of Brent crude and 15 million barrels of West Texas Intermediate.

India is buying Russian crude at a discount, so it is buying a lot: its share of Middle Eastern oil imports fell to the lowest in 19 months in September, according to new data. Russia overtook Saudi Arabia as India’s number-two supplier after Iraq.

China is also buying Russian oil and not giving any indications it’s going to stop when the embargo enters into effect. The same is true of the G7 price cap for Russian crude that should also be coming into effect in a few weeks. China has already stated this will not change its current oil-buying habits.

Yet, with an EU embargo and a G7 price cap, what will almost certainly happen by the end of the year is that oil will become more expensive than it is now. Perhaps more worryingly, fuels – especially diesel…

…click on the above link to read the rest…

War; Economic War; War; Military; War; Economic War – Do You Spot A Pattern?

November 1, 2022

War; Economic War; War; Military; War; Economic War – Do You Spot A Pattern?

The times are not just a-changin’ – they have changed. Let’s take six of the top seven headlines in the Financial Times this morning in Asia as Exhibit A:

  • ‘Biden claims oil companies are ‘war profiteering’ as he floats windfall tax’
  • ‘The Long View. Is Europe winning the gas war with Russia?’
  • ‘Military Briefing: Russia and Ukraine prepare for the rigours of winter war’
  • ‘The Big Read. Egypt and the IMF: will Sisi take the economy out of the military’s hands?’
  • ‘The nuclear threats that hang over the world’
  • ‘Live news updates: Putin says grain deal ‘suspended’ not terminated’’

Do you spot a pattern? War; economic war; war; military; war; economic war. Are you incorporating them into your forecasts? I can assure you that the vast majority of analysts still aren’t because this is apparently ‘exogenous’. If so, what is endogenous is irrelevant. Anyway, on we go into those murky waters, via a mini-edition of the Global D’Oily.

The White House has come out all guns blazing against Big Oil, calling them war profiteers (which the US is no stranger to: **cough** The 2003 Iraq War **cough**), and threatening windfall taxes. President Biden gave a public address and specifically tweeted that: “The oil industry has a choice. Either invest in America by lowering prices for consumers at the pump and increasing production and refining capacity. Or pay a higher tax on your excessive profits and face other restrictions.” Recall when in 2016 I talked of geopolitical ‘Thin Ice’ we could fall through, after which markets would no longer operate the way they used to? Well, it wasn’t just about tariffs: the US is now laying down the law to not only the Russian energy industry, but its own.

…click on the above link to read the rest…

 

Energy Shock

September 17, 2022

ENERGY SHOCK

The world is in energy shock.

European imported coal prices increased 421% before Russia invaded Ukraine. German electric power price increased 518%. European natural gas jumped 765% and Asian spot LNG, 957%.  Since then, it’s gotten even worse.

U.K. natural gas futures price has increased +$99.86 (+574%) from $17.41 to $117.27 per mmBtu just since June 8 (Figure 1).

Figure 1. U.K. natural gas futures price has increased +$99.86 (+574%) from $17.41 to $117.27 per mmBtu since June 8. Source: MarketWatch, CME & Labyrinth Consulting Services, Inc.

Now Europe’s energy crisis is on a path to even worse outcomes.

Russia announced on September 4 that gas supplies to Europe via the Nord Stream 1 pipeline would not resume in full until the sanctions against Russia were lifted. Finland’s Economic Affairs Minister stated ,

“This has had the ingredients for a kind of a Lehman Brothers of energy industry.”
–Mika Lintilä

Many governments are planning to subsidize consumers with price caps and to help industry with loans. My friend and colleague Nate Hagens recently noted that,

“Europe is committing economic suicide.”
–Nate Hagens

That is because these bailouts are happening at a time of economic contraction, high inflation and rising interest rates. That means increased and unproductive debt at a time that states cannot afford its service except with more debt.

French President Emmanuel Macron recently stated,

“What we are currently living through is a kind of major tipping point or a great upheaval … we are living the end of what could have seemed an era of abundance…the end of the abundance of products of technologies that seemed always available.”
–Emmanuel Macron

Meanwhile, OPEC+ has decided to cut production by 100,000 barrels of oil per day reversing 15 months of output increases. Although oil is relatively less expensive for Europeans than natural gas and coal, many countries have begun using diesel as a substitute to generate electric power.

…click on the above link to read the rest of the article…

Europe Cannibalized

September 17, 2022

Abandoned industrial building. Image credit: Pixabay
List of the most energy intensive businesses. Source: US Energy Information Administration

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Russia Admits Weaponization Of Gas, Halts NS1 Shipments “Until Sanctions Lifted” As EU Prepares Response To Energy Crisis

September 6, 2022

Russia Admits Weaponization Of Gas, Halts NS1 Shipments “Until Sanctions Lifted” As EU Prepares Response To Energy Crisis

Putin is done playing around.

Two days after Russia indefinitely halted nat gas supplies via the Nord Stream 1 pipeline for the amusing reason that there was an “oil leak” (shown below)…

… on Monday Russia finally admitted what everyone has known since February – namely that it has weaponized commodities in response to the West’s weaponization of currencies (as Zoltan Pozsar has said all along),when the Kremlin said that Russia’s gas supplies to Europe via the Nord Stream 1 pipeline will not resume in full until the “collective west” lifts sanctions against Moscow over its invasion of Ukraine.

Putin’s spokesman, Dmitry Peskov, blamed EU, UK, and Canadian sanctions for Russia’s failure to deliver gas through the key pipeline, which delivers gas to Germany from St Petersburg via the Baltic sea.

“The problems pumping gas came about because of the sanctions western countries introduced against our country and several companies,” Peskov said, according to the Interfax news agency. “There are no other reasons that could have caused this pumping problem.”

Peskov’s comments were the most stark demand yet by the Kremlin that the EU roll back its sanctions in exchange for Russia resuming gas deliveries to the continent. It also confirms that Russia no longer needs to pretend it needs to export commodities to Europe – after all it has more than enough demand in China and India – and is willing to give Europe just enough to rope to… well, you know the rest.

On Friday, Gazprom said it would halt gas supplies through Nord Stream 1 because of a technical fault, which it blamed on difficulties repairing German-made turbines in Canada…

…click on the above link to read the rest of the article…

German Consumers Just Learned How Much Extra They Will Have To Pay For Gas This Winter

August 17, 2022

German Consumers Just Learned How Much Extra They Will Have To Pay For Gas This Winter

With millions of German facing a painful freeze in the coming months, a winter gas surcharge, which will come into effect in October for German households and businesses, was set at 2.4 euro cents per kilowatt hour on Monday, DW reported on Monday.

Gas prices have been driven by German sanctions on Russian gas, prompting market concerns about energy security and also shortfalls in deliveries in some cases.  And while so far, consumers have been largely shielded from the increases, with companies unable to pass on their increased costs, all that is about to change. 

“It will get more expensive — there is no getting around that. Energy prices continue to rise. But: we are already unburdening citizens to the tune of €30 billion,” Chancellor Olaf Scholz said on Twitter on Monday, soon after the announcement. “And we are working on a further relief package. We will leave nobody alone with these increased costs.” 

The decision on the amount of the levy fell to the company charged with overseeing and coordinating the German gas market, Trading Hub Europe.  The stated aim of the levy is to cover around 90% of the additional costs incurred by gas providers who are now paying higher prices to secure gas, in some cases from new sources other than Russia.

Just under half of German households are heated using gas, the most popular method by far in the country. German dependence on Russian gas has become notorious this year amid the war in Ukraine, both for household power and for industry.

Government seeks sales tax exemption

Finance Minister Christian Lindner has already said he aims to soften the blow by appealing in Brussels for the right to waive sales tax on the new gas levy…

…click on the above link to read the rest of the article…

Germany’s Energy Crisis About To Get Even Worse As Rhine Water Levels Plummet

July 18, 2022

Germany’s Energy Crisis About To Get Even Worse As Rhine Water Levels Plummet

What has already been a year from hell for Germany, which is suffering energy hyperinflation as a result of Europe’s sanctions on Russia, and which is “facing the biggest crisis the country has every had” according to the president of the German employers association, is about to get even worse as the declining water level of the Rhine river, which has historically been a key infrastructure transit artery across Germany, continues to fall and as it does, the flow of commodities to inland Europe is starting to buckle threatening to make an already historic crisis even worse.

The alarming lack of water is contributing to oil product supply problems in Switzerland and preventing at least two power plants in Germany from getting all the coal they need, and what’s more, the continent’s sizzling summer temperatures are forecast to climb even higher in the coming week, leading to even lower water levels.

The 800-mile (1,288-kilometer) Rhine river runs from Switzerland all the way to the North Sea and is used to transport tens of millions of tons of commodities through inland Europe. But with water levels at their lowest for the time of year in 15 years, there is a limit how much fuel, coal and other vital cargo that barges can carry up and down the river.

Low water levels on the Rhine River mean that barges hauling middle distillate-type oil products – typically gasoil/diesel – past Kaub in Germany, are limited to loading about 30% of capacity, according to maritime brokerage services firm Riverlake.

A barge loading in the energy hub of Amsterdam-Rotterdam-Antwerp (or ARA), which can haul 2.5k tons when fully laden, is restricted to taking on about 800 tons if sailing to destinations beyond Kaub…

…click on the above link to read the rest of the article…

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