Russia - General Discussion.

[Vivendi]

Russia Confounds the West by Recapturing Its Oil Riches

Moscow is raking in more revenue than ever with the help of new buyers, new traders and the world’s seemingly insatiable demand for crude. “Nobody’s brave enough to embargo 7.5 million barrels a day of Russian oil and oil products.”

www.wsj.com

Most of the article under pay wall. However there's recording summary can be access. This article shown increasingly what many in the matket already predict. This trade war will cost both sides significantly, however market will adjust and market reallignment will happen.

Increasingly what Biden and EU leadership call of their (collective west) isolation drive to Russia as "International/Global" isolation, shown as "illusion". Russia energy resources just simply too big to ignore by much Global market. It is even remain to be seen if Collective West and their "close" allies can also really decoupling from Russian resources in near future (in the span of next three to five years), as many their politicians call.

The drive for alternative 'green' energy is the thing that many Collective West politicians put as way to cut Russia dependency. Something that many in market clearly 'doubtfull' whether collective west have enough resourcess to conduct massive investment on that area within this decade.

If "prosperous" collective west is being doubt able to conduct significant increase on massive investment to green energy (to cut dependencies to hydrocarbon) much earlier then plan, how about the rest of the world ? This is the question that shown global dependencies to hydrocarbon for next two decades will still be high, regardless those 'green' initiative political drive. Economics cost realities is is still the huge barrier to do that.

Until then the rich hydrocarbon resources owner that's include Russia (and the oil companies) still have time to gain significant margin from hydrocarbon. That's market realities and not political illusion.

It is true that in particular oil is providing a huge income right now to Russia. However, income from oil is not the whole picture. This article adds a lot of nuance to the picture you are presenting, and is predicting "a full-blown disaster" for the Russian economy in 2024/25: Russian economy after six months of war – Riddle Russia

As for the shift to green energy: hopefully the war in Ukraine will accelerate this process. The problem with today's hydrocarbon based economy is that the long term costs of burning coal, oil, and gas have not been included. Had they been, suddenly nuclear, wind, and solar would become extremely attractive and much cheaper than hydrocarbons. The way to include those costs could be to add "CO2 tax" that reflects the future costs of climate exchange, which are enormous:

Climate Change Could Cut World Economy by $23 Trillion in 2050, Insurance Giant Warns (Published 2021)

Poor nations would be particularly hard hit, but few would escape, Swiss Re said. The findings could influence how the industry prices insurance and invests its mammoth portfolios.

www.nytimes.com

Economic cost of climate change could be six times higher than previously thought

Economic models of climate change may have substantially underestimated the costs of continued warming, according to a new study involving UCL researchers.

www.ucl.ac.uk

We already see that if anything, most accepted climate change models are on the conservative side. Melting of Greenland ice will, even if we stop all greenhouse emissions today, increase average sea levels by at least 30cm by 2100 -- add to that melting of glaciers worldwide, and add also the fact that greenhouse emissions will not stop, and the future looks indeed very bleak. Greenland ice loss will raise sea levels by nearly one foot by 2100, study shows

 

[Ananda]

However, income from oil is not the whole picture. This article adds a lot of nuance to the picture you are presenting, and is predicting "a full-blown disaster" for the Russian economy in 2024/25

1. In this thread early on the invasion stage, when many in the west so sure Russia economy will collapse within months, I already put some market assement that the situation will not be as simple as that. Both Russia and West are interconnected as Russia need west for part of their production supply chain, and West (especialy much of Euro Zone) need Russia for energy and raw materials resources. This is not as simple to cut as Collective West leadership try to shown early in trade war. There are cost associated with 'decoupling' that will be beared by both Collective West and Russia.

2. Cost of 'decoupling' is going to significant to both sides. I remember when I put this several months ago, some members in here, basically take me as talking nonsense. They are taking Collective West leadership selling point: "Western Economy is huge, Russian is small one" thus it will only take West in matter of months to crush it. Again market see it differently then Western mainstream media pundits and politicians, "you simply do not mess with your main energy supplier, in the time of inflationary period after covid, and expect do not pay hefty costs".

3. This is the point I will comment on the article you put. Those who predict Russian economy will crush within months, now add their projections to say it will crush within few foreseable years to come. While market going to say (back to point of 'decoupling'): "whoever manage decoupling better will have soft landing, whoever manage bad decoupling will have hard landing or even crash landing".

So Russia need to decoupling from the west especially for its dependence from the west on production supply chain. Just as west need to decoupling from Russia on its dependence on energy. It is all back to this particular factor. If Russia manage to replace its western production supply chains with another supplier (wheather domestics or from non west suppliers), then they will not going to have crashing economy situations, but more a soft landing. Vice versa with the West.

Lets see who manage doing better decoupling management, in this foreseable future.

The problem with today's hydrocarbon based economy is that the long term costs of burning coal, oil, and gas have not been included

The problem is who will make the Investment, and whether the Investment will be significant enough to change from hydrocarbon energy toward this "green" energy. Simple as that.

I like to think myself as most of colleugues in the market as having practical and realistic point of view. We are already seen enough political BS that fading away, the moment realisations of the total bills coming to their realities. Dream is one thing, but for us we need to see the money trails. So far we don't see enough money trails to justified the Green switching will come in significant way within this decade. Even next decades still questionable. Thus why I see Global dependence to Hydrocarbom will take at least another two decades, base on current "money trails".

Also, the "greenies" is the ones that making mess, at least in Euro zone. If they are not lobbying and give 'scare' tactics to the mass on nuclear, then Euro Zone will not be in this level of dependence to Hydrocarbon. So be realistics toward technology development. Even know there are development to recycles nuclear fuel waste toward another cycle of fuel.

So don't talk about this global warming, if there's not enough realism and money trails to support this hydrocarbon switch. Realistically only Nuclear that can provide enough energy mass to replace most of hydrocarbons (under current tech and economics). The greenies mess it all up.

 

[John Fedup]

Involvement in Russia’s energy sector may profitable but seems to be detrimental to one’s health. An example of why most oligarchs don’t criticize Putin despite the millions they have lost due to the Ukraine invasion.

Russian oil chief Maganov dies in 'fall from hospital window' Russian oil chief Maganov dies in 'fall from hospital window'

 

[ngatimozart]

Involvement in Russia’s energy sector may profitable but seems to be detrimental to one’s health. An example of why most oligarchs don’t criticize Putin despite the millions they have lost due to the Ukraine invasion.

Russian oil chief Maganov dies in 'fall from hospital window' Russian oil chief Maganov dies in 'fall from hospital window'

I suspect that he was defenestrated for his lack of faith in their Dear Leader.

 

[Ananda]

Europe's energy crisis could escalate if governments don't cover $1.5 trillion in margin calls, Norwegian energy firm says

Europe's energy trading could falter if governments don't provide liquidity for $1.5 trillion in margin calls, a Norwegian energy exec said.

markets.businessinsider.com

Despite the rhetoric that Western Leadership especialy Eurozone talk on how Euro zone will be succesfully decoupling from Russian energy, the market clearly shown the increasing costs on energy that shown much more costs actually needed (relative toward what Euro Government try to pictures).

This USD 1.5 Trillion that market predict is not part of pricing costs. This is just the additional capital needed for traders to cover their possitions. This is just to cover base margin.

Western leadership talk as is it is easy to cap the margin. They talk to cap Russian Margin, and they try now talking to cap margin from non Russian energy market also. Political talk is cheap, but how politics can dictate more to market, that's the thing I like to see.

 

[John Fedup]

Europe's energy crisis could escalate if governments don't cover $1.5 trillion in margin calls, Norwegian energy firm says

Europe's energy trading could falter if governments don't provide liquidity for $1.5 trillion in margin calls, a Norwegian energy exec said.

markets.businessinsider.com

Despite the rhetoric that Western Leadership especialy Eurozone talk on how Euro zone will be succesfully decoupling from Russian energy, the market clearly shown the increasing costs on energy that shown much more costs actually needed (relative toward what Euro Government try to pictures).

This USD 1.5 Trillion that market predict is not part of pricing costs. This is just the additional capital needed for traders to cover their possitions. This is just to cover base margin.

Western leadership talk as is it is easy to cap the margin. They talk to cap Russian Margin, and they try now talking to cap margin from non Russian energy market also. Political talk is cheap, but how politics can dictate more to market, that's the thing I like to see.

Perhaps some reality is sinking in wrt energy.

Gas crisis spurs Germany to mull extending life of nuclear plants

Germany may extend the life of its three remaining nuclear power plants, the economy ministry said on Monday, as public support rises in the face of a possible cut-off of Russian gas.

www.reuters.com

 

[koxinga]

As for the shift to green energy: hopefully the war in Ukraine will accelerate this process.

It is an consumption issue, as much as it is an energy mix issue. At the current consumptions levels, there is no way non-nuclear green/sustainable sources can replace hydrocarbons. Investments in reliable nuclear tech is needed, if consumptions remain the same.

 

[kato]

Perhaps some reality is sinking in wrt energy.

Of the two plants that the ministry of the economy wants to "extend" one of the two operators already pretty much told them no in public, the second one goes "no comment, but the federal government needs to clarify first". That second operator is effectively owned by a state government that has spoken out in favour of the extension due to party politics (right-wing Greens supporting each other), so that one's actually a very negative statement.

The one with the explicit No also stated that if they were to extend operations - from October this year, not January next year - their remaining fuel elements are good for about 4 TWh at maximum 1400 MW output. 4 TWh is about 0.75-0.80% (!) of German annual domestic consumption.

The main reason for keeping them active isn't the gas crisis anyway btw. It's that France is actually buying electricity in Germany right now (in a reversal of traditional roles) because most of their nuclear plants can only operate at considerably reduced capacity due to lack of water. The ministry's "proposal" is to keep two of the currently three still operating plants in a "cold reserve state" (for about 4-5 months beyond their planned final shutdown in December) in case this situation persists and is exacarbated in the winter.

 

[Ananda]

some reality is sinking in wrt energy.

Question more to where the Investment fund going to be get. The cost of Hydrocarbon can reduce the amount of Investment fund available to go to non hydrocarbon energy sooner.

So it's two edge sword, the need to fasten Investment on switching to more non hydrocarbon while in same time manage the cost of Hydrocarbon fluctuations, which in the end will take much available fund needed on the first.

Like I said, market believe in money trails not politicians rhetorics.

 

[John Fedup]

Of the two plants that the ministry of the economy wants to "extend" one of the two operators already pretty much told them no in public, the second one goes "no comment, but the federal government needs to clarify first". That second operator is effectively owned by a state government that has spoken out in favour of the extension due to party politics (right-wing Greens supporting each other), so that one's actually a very negative statement.

The one with the explicit No also stated that if they were to extend operations - from October this year, not January next year - their remaining fuel elements are good for about 4 TWh at maximum 1400 MW output. 4 TWh is about 0.75-0.80% (!) of German annual domestic consumption.

The main reason for keeping them active isn't the gas crisis anyway btw. It's that France is actually buying electricity in Germany right now (in a reversal of traditional roles) because most of their nuclear plants can only operate at considerably reduced capacity due to lack of water. The ministry's "proposal" is to keep two of the currently three still operating plants in a "cold reserve state" (for about 4-5 months beyond their planned final shutdown in December) in case this situation persists and is exacarbated in the winter.

Wasn’t aware of France’s water shortage wrt nuclear plant operations. I assume this is due to the extremely hot summer and a lack of precipitation?

 

[John Fedup]

Question more to where the Investment fund going to be get. The cost of Hydrocarbon can reduce the amount of Investment fund available to go to non hydrocarbon energy sooner.

So it's two edge sword, the need to fasten Investment on switching to more non hydrocarbon while in same time manage the cost of Hydrocarbon fluctuations, which in the end will take much available fund needed on the first.

Like I said, market believe in money trails not politicians rhetorics.

Yes, a vicious circle for sure. Add in the military support for Ukraine and Germany’s realization they need to recapitalize their military further strains alternative energy investment. Hopefully new small modular reactors could ease the investment pressure.

 

[kato]

Wasn’t aware of France’s water shortage wrt nuclear plant operations. I assume this is due to the extremely hot summer and a lack of precipitation?

Nuclear plants account for 30% of all water consumption in France. The heat has led to low waters with high temperature in most rivers, to a point where in many cases it simply is no longer suitable for cooling. There is a EU-wide regulation (transferred to French national law) that cuts operations at a water temperature of 28°C - which most rivers exceed right now. The 28°C limit is to protect wildlife in the rivers.
The whole thing started in May already, when two plants had to cut production to lower output temperatures. Five nuclear plants in France are currently operating on a special dispension that they can exceed this, although this is limited until Sep 11th - the only time such a dispensation was made previously was in 2018 for a single nuclear plant.

Including plants in regular maintenance (and ones shut off due to damage from age...) only 50% of reactors in France are continuing to run right now.

 

[Ananda]

Putin is waging an economic war with Europe. Britain’s absurd energy plan plays into his hands | Will Hutton

The Tories’ ideology of daffy libertarianism seeks to triumph over evidence and reason

www.theguardian.com

This article title of "putin waging economic war" basically missleading in my opinion. It is the collective West that taking possition to start the economic war first. Whatever semantics they want to call it, the Western leadership now has to realise that the 'economics war' is far more serious then when they start this after Russian invasion to Ukraine.

Some analysts speculate that collective west increasing war supplies to Ukranian as way to force Russian 'political' capitulation before winter. However how you are expecting this economic war to end coincide with whatever results in Ukranian ground ?

As some market analyts already say, the energy crisis is part of economic decoupling that West must face. Whatever the result in Ukranian war will not matter much. West must find new energy sources, as Russian also must find new customers. It is just part of decoupling consequences.

Russia Poised to Ship First Cargo From New LNG Plant to Greece

www.bloomberg.com

Whether some in EU still will sources energy from Russia (thus shown cracks in EU policy of future entanglement from Russian energy), will remain to be seen. Personally I still see some in West (especialy in East or South) will still taking some Russian energy from Russia.

It is just part of realities that no new energy in Global supply chain can replace Russia energy. The talk of green energy replacement will have to take further back, as 'money trails' now being used for increasing new hydrocarbons instead to be used on further 'green' investments.

Add:
It is come to my attention as some member in here accuse me of only give anynomous reference on market analysts. However I already check my posts in this thread, I did already put what market warning the moment this trade war happening.

I do have some analysis that mostly used by market people and not for wide public usage, as it is close under pay wall. However if anyone want to be more getting information there's enough assessment in the like of Bloomberg etc.

Von der Leyen calls for 'emergency intervention' in electricity market

Amid record-breaking gas prices, the European Commission president said the current market rules are no longer "fit for purpose". #EuropeNews

www.euronews.com

Even EU leadership now blames the market, as seems politicians now try to control the market movements. If they do that and their credentials as regulators will not much different then Russian and Chinese regulators that control their market movements.

Seems the longer this is going, the more temptation for politicians to regulate market movements, which is contradict on Western market base on.

 

[swerve]

It’s clear to see that NATO is a threat to Russia, I mean Ukraine is not yet a member and Russians are already dying.. why does Ukraine need to join NATO so badly? The Russians will be asking that question

All Russia had to do to avoid coming into conflict with NATO was (1) not promote separatists & Russian nationalists within the borders of NATO members & (2) not try to conquer Ukraine. Why is that hard?

Russia has been stirring up trouble all along NATO's borders. Putin's financed & given other aid to (non-violent - at least so far) Russian separatist groups in Estonia & Latvia, supported (including direct military aid) breakaway organised crime havens in Moldova & Georgia, invaded two neighbours of NATO, seized & annexed to Russia territory of one of those neighbours, carried out blatant criminal activity within NATO countries such as murdering Russian exiles, threatened NATO, individual NATO countries, & friendly neutrals between NATO & Russia and shown that he's utterly untrustworthy, e.g. by breaking treaties Russia made with NATO members. And all of that was before the current wat in Ukraine, which he began with no provocation whatsoever.

Who's the fucking threat? The gangster state headed by Putin, or NATO? What has NATO done to Russia that was in any way comparable with any of that?

Calling NATO a threat to Russia is like calling the police a threat to Sicily. They're a threat only to the Mafia.

 

[Musashi_kenshin]

carried out blatant criminal activity within NATO countries such as murdering Russian exiles

It's worse than that, Russia deployed chemical weapons in Salisbury in 2018, and one person died (not the target). The fact the nerve agent wasn't dropped via a bomb is irrelevant. It was an attack that threatened and caused harm to the general public.

Russia was incredibly lucky that only one British national died and that the death was far enough away from the main attack that there wasn't more outrage. The UK government could have declared the attack an act of war and demanded NATO retaliation, whether by military means or a total trade embargo. As it was, we showed incredible restraint by just responding diplomatically.

 

[Vivendi]

I don't know where you see this conflict begin. Ukranian public unity is not felt on every corner if Ukranian soil. Feel free to think on that, but many others especially in non western world cam see diferently.

US, UK, Spanish, Canadian, Belgium unity is not felt in every corner either... Still, this did not lead to civil war in those countries, in spite of Russian attempts at stirring trouble and weakening democratic processes in several of those countries. Catalonia: Where There’s Trouble There’s Russia | CEPA
UK intelligence report to disclose Russian meddling in Scottish independence vote: The Telegraph

3 years after Russian hackers tapped Illinois voter database, officials spending millions to safeguard 2020 election

Three years after Illinois’ voter registration database was infiltrated by Russian hackers, Illinois and local officials are spending millions to upgrade the cyber defenses protecting voters …

www.chicagotribune.com

 

[Atunga]

All Russia had to do to avoid coming into conflict with NATO was (1) not promote separatists & Russian nationalists within the borders of NATO members & (2) not try to conquer Ukraine. Why is that hard?

Russia has been stirring up trouble all along NATO's borders. Putin's financed & given other aid to (non-violent - at least so far) Russian separatist groups in Estonia & Latvia, supported (including direct military aid) breakaway organised crime havens in Moldova & Georgia, invaded two neighbours of NATO, seized & annexed to Russia territory of one of those neighbours, carried out blatant criminal activity within NATO countries such as murdering Russian exiles, threatened NATO, individual NATO countries, & friendly neutrals between NATO & Russia and shown that he's utterly untrustworthy, e.g. by breaking treaties Russia made with NATO members. And all of that was before the current wat in Ukraine, which he began with no provocation whatsoever.

Who's the fucking threat? The gangster state headed by Putin, or NATO? What has NATO done to Russia that was in any way comparable with any of that?

Calling NATO a threat to Russia is like calling the police a threat to Sicily. They're a threat only to the Mafia.

So what your trying to say in a nutshell, is that Russia is Evil and NATO is Holy? No, I don’t agree with you, it takes two to tango. What’s NATO doing at Russia’s door steps? Why is NATO building missile defence systems all around Russia? Why does Ukraine have to join NATO at all cost? I Am of African heritage and I can tell you NATO countries have done worst to us than anything u want to accuse Putin of.. they still doing it as we speak.. Why the double standards??

 

[swerve]

So what your trying to say in a nutshell, is that Russia is Evil and NATO is Holy? No, I don’t agree with you, it takes two to tango. What’s NATO doing at Russia’s door steps? Why is NATO building missile defence systems all around Russia? Why does Ukraine have to join NATO at all cost? I Am of African heritage and I can tell you NATO countries have done worst to us than anything u want to accuse Putin of.. they still doing it as we speak.. Why the double standards??

"Russia is Evil and NATO is Holy "
What the fuck are you on about? That's blatant misrepresentation of what I wrote. Read it! Think! Why do you think I keep saying "Putin"? He & his cronies are not Russia, despite being in control of it.

"What’s NATO doing at Russia’s door steps?"
The fable of the sun & the north wind. Putin threatens Russia's former subject states with dreadful consequences if they don't bow down before him. NATO & the EU say "Hello, neighbour. You want to come in? Of course, you're welcome". Can you really not see the difference? You have to apply to join NATO. If you don't join Russia, you get invaded. What are you smoking, that you can't see the difference?

"Why is NATO building missile defence systems all around Russia?"
It isn't. It's building a couple in NATO countries, to defend them. Germany & some other NATO countries had stayed out of that - until Putin's latest mad-dog aggressive fit. Germany's now planning to buy in an already-developed missile defence system (quickest way to get one), having seen what Russia's doing in Ukraine, & after Putin's issued threats. Sun & north wind . . . . attack people threaten people, what do you expect them to do? Putin's a great salesman for manufacturers of BMD systems.

And "all around Russia"? Have you looked at a map?

What's NATO done in Africa? It's out of the NATO area. If you're talking about the colonial past, well, horrible things were done - but it's the past. We're discussing the present day. How many African countries is NATO currently invading & trying to conquer?

 

[Atunga]

If your referring to Western colonialism/imperialism; this is a different issue altogether. Take Belgium for example; at one point the Congo was the personal property of the Belgian King and Congolese worked and died in horrible conditions to benefit their white overlords but this is a different issue to the subject in hand.



Like how Ukrainian refugees have been treated compared to the experience of African and Arab refugees? Like comparing the European response to the Ukraine compared to other conflicts which have seen greater human suffering? Such is the world we live in.

Am not even talking about slavery and colonialism… just look at the way Ghadafi was killed and Libya allowed to turn into a gangsters paradise intentionally, the WEST is robbing Africa dry till date and it seems to be alright with everyone.. for some reason the liberal western media is completely blind to western atrocities in Africa and other places but they want me to care about Ukraine… see why some countries in the global south don’t support the west or chose to be neutral

 

[Atunga]

"Russia is Evil and NATO is Holy "
What the fuck are you on about? That's blatant misrepresentation of what I wrote. Read it! Think! Why do you think I keep saying "Putin"? He & his cronies are not Russia, despite being in control of it.

"What’s NATO doing at Russia’s door steps?"
The fable of the sun & the north wind. Putin threatens Russia's former subject states with dreadful consequences if they don't bow down before him. NATO & the EU say "Hello, neighbour. You want to come in? Of course, you're welcome". Can you really not see the difference? You have to apply to join NATO. If you don't join Russia, you get invaded. What are you smoking, that you can't see the difference?

"Why is NATO building missile defence systems all around Russia?"
It isn't. It's building a couple in NATO countries, to defend them. Germany & some other NATO countries had stayed out of that - until Putin's latest mad-dog aggressive fit. Germany's now planning to buy in an already-developed missile defence system (quickest way to get one), having seen what Russia's doing in Ukraine, & after Putin's issued threats. Sun & north wind . . . . attack people threaten people, what do you expect them to do? Putin's a great salesman for manufacturers of BMD systems.

And "all around Russia"? Have you looked at a map?

What's NATO done in Africa? It's out of the NATO area. If you're talking about the colonial past, well, horrible things were done - but it's the past. We're discussing the present day. How many African countries is NATO currently invading & trying to conquer?

So tell me, the missile defence systems being built in Poland and Romania, are there to intercept Iranian missiles?? Don’t talk about Putin if your not ready to talk about western bullying? The west knew where to find and sanction Russian money, let them find and return African money in the same vein? You want to blame Putin when the west are masters of carving and breaking up countries.. there were massive celebrations in western capitals when Ghadafi died, now look at Libya.. u must be so happy