Tag Archives: Russian economy

Everyone Eventually Runs Out Of Patience

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On Wednesday, Zero Hedge posted an update on what is happening in Iran and the Strait of Hormuz.

The article reports:

  • US strikes on Iran announced, as ‘heavy costs’ for earlier targeting of multiple commercial vessels
  • Oil rises as Treasury revokes June 21 Iran oil waiver
  • Hormuz Threat Level Raised To “Severe” 
  • Three maritime incidents reported on Hormuz in last 24 hours 
  • Another unidentified vessel hit by a Drone
  • IRGC forces hit a Saudi Tanker 
  • IRGC forces hit a Qatari LNG tanker

These are the actions of a cornered animal fighting for its life.

The article concludes with a summary of the impact of the current situation:

Diplomatic Developments

• Iran’s Foreign Minister Abbas Araghchi warned on Tuesday that negotiations on a final deal will not commence if threats continue, referencing a memorandum of understanding with the US

• Iranian President Masoud Pezeshkian will travel to Iraq on Tuesday to attend funeral processions for former Supreme Leader Ali Khamenei, scheduled for Wednesday in Najaf and Karbala

Market Impact

• European natural gas prices surged as much as 6% on Tuesday, the most in a month, following the attacks on ships in the Strait of Hormuz

• Oil prices climbed on Tuesday, with Brent trading near $73 a barrel, as the attacks highlighted continued risks to vessels in the critical waterway

• Gold fell for a second day on Tuesday, dropping as much as 1.2% to below $4,120 an ounce, as the Hormuz attacks rekindled inflation concerns

• France lowered its 2026 GDP growth forecast to 0.7% from 0.9%, citing the Middle East conflict as a factor holding back output

Oil Trade Developments

• India’s state-run refiners are in talks with traders marketing Iranian crude and preparing to buy barrels if the US extends waivers beyond August or eases restrictions

• Two supertankers hauling Saudi crude are heading to the US for the first time since February, following the reopening of the Strait of Hormuz

• Russia’s Urals crude price averaged $41.66 a barrel at western ports in early July, falling to pre-Iran war levels and less than half the level during the height of oil market turmoil in April

There are a lot of moving parts here.

For instance, according to Artificial Intelligence (AI):

To understand the price of oil needed to sustain the Russian economy today, consider the following factors:

    1. Budget Breakeven: The Russian government requires oil prices to be around $40-$50 per barrel to balance its budget.
    2. Economic Stability: Prices above $60 per barrel are generally needed for economic stability and growth.
    3. Inflation Control: Higher oil prices help manage inflation and support the ruble’s value.
    4. Social Spending: Sustaining social programs and pensions often requires oil prices to exceed $70 per barrel.
    5. Global Market Influence: Fluctuations in global oil demand and geopolitical tensions can impact the necessary price for sustainability.
    6. Long-term Investments: To fund future projects and infrastructure, prices above $80 per barrel are preferable.

Russia is an ally of Iran. Russia needs high energy prices to sustain its economy. Did Russia play a role in encouraging the attacks in the Strait of Hormuz?

This Could Be Interesting

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One of the things that allows Russia to continue its war against Ukraine is the high price of oil. The sale of Russian oil finances that war. When America was energy independent, the price of oil was lower, and the Russian economy was struggling. Since the Biden administration declared war on American oil, the price of oil internationally has skyrocketed. That has been bad news for consumers, but good news may be on the way.

On Thursday, Zero Hedge reported the following:

Confirming a move which had been widely expected after the internal acrimony at the last OPEC+ meeting, moments ago Angola – also known as China’s gas station in Africa – announced it was leaving OPEC, the country’s news agency ANGOP reported on Thursday, quoting the African producer’s oil minister Diamantino de Azevedo.

The decision was taken at a meeting of the Council of Ministers, led by the President of the Republic, João Lourenço, the news agency noted. Jornal de Angola also reported the news.

As OilPrice notes, Angola and another African OPEC member, Nigeria, had a spat with the other cartel members before the latest meeting regarding their oil production quotas.

The chart below shows the impact of announcement on oil prices:

 

This could be good news for consumers. It also might result in peace negotiations in Ukraine if the trend continues.

The article concludes:

However, it seems now that Angola doesn’t see an OPEC membership as beneficial anymore after the recent spats over its production quota.  

Angola, which joined OPEC in 2007, holds untapped oil and gas resources estimated at 9 billion barrels of proven crude oil reserves and 11 trillion cubic feet of proven natural gas reserves.  

The news sent oil, which had caught a bid in recent days on fears about a protracted Red Sea blockage, sharply lower and back to Tuesday levels.

Stay tuned. This could change rapidly depending on the freedom of transport in the Red Sea.

Russian Collusion Is Real–Just Not Where Robert Mueller Is Looking

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The Daily Signal posted an article today about the collusion between Russia and some popular environmental groups in America.

The article reports:

New Yorkers who are missing out on the natural gas revolution could be victims of Russian spy operations that fund popular environmental groups, current and former U.S. government officials and experts on Russia worry.

Natural gas development of the celebrated Marcellus Shale deposits has spurred jobs and other economic growth in neighboring Pennsylvania. But not in New York, which nearly 10 years ago banned the process of hydraulic fracturing, also known as fracking, to produce natural gas.

Two environmental advocacy groups that successfully lobbied against fracking in New York each received more than $10 million in grants from a foundation in California that got financial support from a Bermuda company congressional investigators linked to the Russians, public documents show.

The environmental groups Natural Resources Defense Council and the Sierra Club Foundation millions of dollars in grants from the San Francisco-based Sea Change Foundation.

 “Follow the money trail, and this [New York] ban on fracking could be viewed as an example of successful Russian espionage,” Ken Stiles, a CIA veteran of 29 years who now teaches at Virginia Tech, told The Daily Signal.

The article explains why the Russians would be concerned about energy development in America:

Since the U.S. is now the top producer of natural gas in the world, and well positioned to export liquefied natural gas across the globe, Russia recognizes it gradually could lose influence in parts of the world where Moscow has been the dominant supplier of oil and gas, Stiles said in a phone interview.

“America’s natural gas revolution has huge geopolitical ramifications, so Russia’s motivation to try to block our natural gas development is easy to understand,” the CIA veteran said. “If you are worried about the Russian bear rearing its ugly head in the next several years, the way to stop that and put it back into its cage is to cut it off at the knees financially.”

“That’s what natural gas pipelines are all about and that’s what fracking is all about. We are providing affordable energy to average Americans at home and our allies overseas.”

The Russian economy depends on higher oil prices. Russia also uses energy to blackmail European countries into cooperation. America’s development of its own natural resources is a necessary balance to the Russian use of energy as a blackmail tool.