Russia economy doing better than expected

Investment Analysis Clubs Macro Economic Trends and Risks
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https://www.cnn.com/2022/08/28/business/russia-economy-ukrai…

While the sanctions leveled against Russia when they invaded Ukraine did take a bite, it was not as deep as planned. First of all, the sanctions are porous, second of all some commodities like the massive Russian trade in gold were untouched and third of all, Russia has developed work-arounds for some of them.

To say high energy prices have so far insulated Russia would be an understatement.
The International Energy Agency says Russia’s revenues from selling oil and gas to Europe doubled between March and July this year, compared to an average of recent years. That’s despite declining volumes. IEA data shows gas deliveries to Europe are down by about 75% over the past 12 months.

Oil is a different matter. The IEA’s March prediction that 3 million barrels a day of Russian oil would come off the market from April because of sanctions, or the threat of them, has not materialized. Exports have held up, though Rystad Energy analysts note a slight drop over the summer.
The major factor has been Russia’s ability to find new markets in Asia.

According to Houmayoun Falakshali from commodities consultancy Kpler, most of Russia’s seaborne oil exports have gone to Asia since the start of the war. In July, the share was 56%, compared to just 37% in July 2021.

Jeff

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Glad for them.

Too many middle class Russians have become targets of America and the West - over something they have nothing to do with.

Then we wonder why some grow up angry - - come to Florida — and take flying lessons.

I don’t wonder anymore. Not at all.

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The Russian economy can not measured just based on their oil and gas exports. Here is the news on the total Russian economy:

NYT August 12, 2022

Russian Economy Contracts Sharply as War and Sanctions Take Hold

The country’s gross domestic product from April through June declined 4 percent from a year earlier, new government data shows.

The economy shrank 4 percent from April through June compared with a year earlier, the Russian statistics agency said on Friday. It is the first quarterly gross domestic product report to fully capture the change in the economy since the invasion of Ukraine in February. It was a sharp reversal from the first quarter, when the economy grew 3.5 percent.

Western sanctions, which cut off Russia from about half of its $600 billion emergency stash of foreign currency and gold reserves, imposed steep restrictions on dealings with Russian banks and cut access to American technology, prompting hundreds of major Western corporations to pull out of the country.

Retail trade declined about 10 percent, the statistics agency said, while wholesale business activity fell 15 percent.

Michael S. Bernstam, a research fellow at the Hoover Institution at Stanford University, said the data released on Friday were in line with other reports from Russia. He, too, expects the economy to deteriorate in the second half of this year, and then again in 2023.

https://www.nytimes.com/2022/08/12/business/russia-economy-g….

Jaak

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Too many middle class Russians have become targets of America and the West - over something they have nothing to do with.

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I do not see the middle class Russians as targets of America or the West. I do not understand why you can not graps the fact that America and the West are targeting Russian elites who support Putin.

Ordinary Russians know it is Putin that has caused their economy to take a nose dive and the cost of their food, energy, and consumer good to skyrocket.

Maybe the ordinary Russians will revolt again and get rid of Putin who is the cause of their misfortune.

Jaak

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And the Russians are burning money to send a message.

Russia burns off gas as Europe’s energy bills rocket
www.bbc.com/news/science-environment-62652133
As Europe’s energy costs skyrocket, Russia is burning off large amounts of natural gas, according to analysis shared with BBC News. They say the plant, near the border with Finland, is burning an estimated $10m worth of gas every day…

The analysis by Rystad Energy indicates that around 4.34 million cubic metres of gas are being burned by the flare every day. It is coming from a new liquefied natural gas (LNG) plant at Portovaya, north-west of St Petersburg.

DB2

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And the Russians are burning money to send a message.

What’s the message? We’re willing to cut off our nose to spite our face?

Russian military strength was the first myth to be destroyed. The craftiness of Russian leaders may be the next.

AW

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And the Russians are burning money to send a message.
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What’s the message?

The message is that Russia controls German energy supply.

DB2

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I’m not sure that missing out on Big Macs is hurting the elites that much.

I’m not sure that burger flippers losing jobs, is hurting the elites that much.

But, like I said - in the past, when some in the world expressed “resentment” over American meddling, I and others judged them. I apologize summarily to them for that.

Oh well, nice to see there’s little complaints on nuclear buildup and missile defense these days.

Memo to ordinary russians: C’mon just revolt. Look at Putin’s enemies - if you can find them alive. It’s not that hard. You can’t get an iPhone or a burger until you do. Signed, the West.

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I’m not sure that missing out on Big Macs is hurting the elites that much.

I’m not sure that burger flippers losing jobs, is hurting the elites that much.

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The elites are hurting from their yachts, villas, companies, soccer teams and monies being siezed. The elites can not travel to their favorite European and North American vacation, gambling, sports, and entertainment spots.

Jaak

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The message is that Russia controls German energy supply.

DB2

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No! The message is that Russian technology is all screwed up. They can not control all the gas coming into the facility so they have to flare it. They could not even fix components on Nord Stream 1.

Russians are losing $10 million per day for 2 months = $600 million. Not good for Russian economy.

Jaak

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When cornered close to failure or collapse after making a stupid or malevolent move people can become dangerous and irrational. The Guardian’s quite sane and fiercely opinionated Simon Tisdall has a useful column.

https://www.theguardian.com/commentisfree/2022/aug/28/putin-…

Putin did not “anticipate 80,000 Russian soldiers dead or wounded. Dying with them is his Peter the Great pipe dream of a ‘greater Russia’. Extinct already is his reputation as anything other than a killer and a crook.” An escalation of the invasion using more soldiers on more fronts seems out of reach.

After briefly discussing how neither accepting defeat nor declaring a specious “victory” in the face of obvious defeat are workable Putin choices he discusses how Putin can instead attack and distract and dismantle NATO and EU unity and effectiveness.

A very interesting read.

david fb

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I care how little say the average Russian has. Until he or she sheds a lot of blood against their regime I have zero sympathy. Zero…the Russian middle class…ha! zero class!

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I’m all for taking from the elites - - mind you, I wonder - if America’s leader does something horrible - is the world allowed to take possessions of the President’s buddies also?

I’m just wondering how this “we won’t do business in Russia” - how hurting the middle class of products, services and jobs - is advancing the cause.

Like I said, I understand fully - why people in the world - have ‘reacted’ in certain ways.

I frankly don’t have a dog in this fight I won’t say more - as it will be politics.

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How does it further the cause?

In the next few years as this plays out the Russian public will see Putin differently.

We are not hurting the Russian middle class at all. We are doing a lot less business with Russia. If Russia needs to do business for its own sake how about not killing thousands of people in the neighboring countries? Business first…not murder.

Really we are not hurting the Russian middle class. The Russians need to do business. The Russians have a choice…war or business. They can change their minds at any time. Until they do business they hurt themselves not just murder Ukrainians.

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I wonder - if America’s leader does something horrible - is the world allowed to take possessions of the President’s buddies also?

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It is not Putin that invaded Ukraine. He was totally supported by his Oligarhs, military leaders, political leaders, and his FSB leaders in going ahead with the invasion.

Jaak

Lock them up and also the former leader of USA for stealing secrets.

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https://www.wsj.com/articles/russia-confounds-the-west-by-re…

Russia pumps almost as much oil into the global market as it did before its invasion of Ukraine. With oil prices up, Moscow is also making more money.

https://www.reuters.com/world/india/why-india-ramped-up-russ…
Since the start of the war in Ukraine, the United States and its allies have leaned on countries to buy less Russian oil in a bid to punish Moscow for its aggression.

Indian refiners have done the opposite, snapping up more Russian crude while the government explores ways to protect domestic oil firms from punishment should they fall foul of sanctions.

The result has been a huge leap in volumes from Russia. In May, India imported 819,000 barrels per day (bpd), from 277,000 bpd in April and 33,000 bpd a year ago. Russia is now the second biggest supplier to India, replacing Saudi Arabia, while Iraq continues to be the largest.

https://markets.businessinsider.com/news/commodities/russian…
Russian oil products are still reaching the US market because traders are obscuring their origin by blending crude and refining it elsewhere.

Supplies believed to be at least partially composed of Russian oil arrived in New York and New Jersey last month, the Wall Street Journal reported Wednesday. Those likely came from India — which has been buying discounted Russian barrels for months.

Hey! Business is business.

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from the Weekly Oil report

Russian crude exports have been on a downward trajectory this summer, falling to 4.6 million b/d in June and 4.2 million b/d in July, according to Rystad Energy estimates. In June, both Europe and Asia reduced purchases of Russian crude, while July exports to Europe increased slightly as the region prepares for an oil embargo set to take effect in December. At the same time, exports to Asia continued to drop, which could be explained by discounts proposed for Russian blends being less generous than before.

EU imports of Russian crude are expected to dwindle to just 600,000 b/d by December 2022 – a nearly 2.5 million b/d drop from the 3 million b/d before Russia-Ukraine conflict. Rystad Energy still expects that Russia will be able to redirect a significant portion of crude volumes – or 75% in the base case – to Asia and other markets.

The Central Bank of Russia expects the national economy to collapse by 7.5-8% year-over-year in third-quarter 2022 and by 10-11% in the fourth-quarter 2022. Russia will have to cope with a national economic crisis as well as source new markets for its oil and oil products when the EU embargo comes into force, Rystad said.
Oil & Gas Journal

https://energybulletin.org/?mc_cid=fb4dc4fa0a&mc_eid=1f6…

t

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https://oilprice.com/Latest-Energy-News/World-News/IEA-Russi…
According to the latest report by the International Energy Agency (IEA), Russian oil exports fell by 115 kb/d in July to 7.4 mb/d, from about 8 mb/d at the start of the year. That decline is nowhere near the 2-3 million b/d slump predicted by some experts. The country’s crude and oil product flows to the US, UK, EU, Japan and Korea have slumped by nearly 2.2 mb/d since the outbreak of the war, two-thirds of which have been rerouted to other markets. Export revenues fell from 21 bn in June to $19 bn in July, on both reduced volumes and lower oil prices.
Exports to India have been able to make up for much of the reduced flows to western nations. New reports have emerged that during the second quarter, India slashed its crude imports from the United States by one million metric tonnes while sharply ramping up imports of discounted Russian oil.

India’s energy mix now looks dramatically different from a year ago. Last year, Russian oil in India’s crude basket amounted to a paltry 2.2%, while the U.S. was 9.2%; right now, Russia accounts for nearly 12.9% of India’s crude imports, while the U.S. share has tumbled to just 5.4%.

Revenues are at 90% of previous levels.

Now Rystad’s prediction
https://www.ogj.com/general-interest/economics-markets/artic…
Russia has so far demonstrated high resilience to the unprecedented pressure imposed by Europe and the US – but the worst is yet to come, according to Rystad Energy research.
After a sharp drop of 1 million b/d in April, Russia has aggressively ramped up oil production in June and July, with total output in July almost recovering to the level seen before Russia’s war with Ukraine began in late February. The significant increase was largely due to higher refinery output, while crude exports contracted after reaching record levels of more than 5 million b/d in April and May. Rystad Energy’s new estimate for average Russian crude production in 2022 is 9.6 million b/d, 200,000 b/d higher than expected in June, but the impending European Union (EU) import embargo and domestic economic challenges imply major obstacles lie ahead.
**trading operations with Russian crude dropped off the radar after February, making it difficult to track the spreads between Russian blends and benchmarks, Rystad Energy said.**Price reporting services have been reporting various numbers: Argus had the Urals discount to Brent in July reduced to $15/bbl, while Platts and Reuters did not change their estimates between $30/bbl and $40/bbl.

It appears Rystad is using their crystal ball in their prediction. Doesn’t mean their prediction will come to past.

Rystad Energy admits:“Rystad Energy still expects that Russia will be able to redirect a significant portion of crude volumes – or 75% in the base case – to Asia & other markets.
Russian export losses are estimated at only 500,000- 600,000 b/d by December 2022.”
So a 25% prediction decline.

Oil production & markets are dynamic ever changing. If Iran cuts a nuclear deal with the West, the Saudis & other OPEC nations will cut production to match the new Iran oil flow:https://www.reuters.com/markets/commodities/with-iran-deal-l…

Meanwhile is making a gas deal with Iran & the article talks about a new Russia-China gas pipeline that break ground within 2 years:https://markets.businessinsider.com/news/commodities/russia-…

Personally I believe a nuclear with Iran is unlikely as Iran cozy ups with Russia. And the fact that the US is trading attacks with the Iranians in Syria. Come again-Why are we still in Syria illegally? Illegal? The U.S. military presence in Syria is unauthorized by Congress and has no international mandate. What an illogical shytty mess.

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tjscott writes: Why are we still in Syria illegally? Illegal? The U.S. military presence in Syria is unauthorized by Congress and has no international mandate. What an illogical shytty mess.

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Here is why the US still has 900 soldiers in Syria?

8/24/2022

  • The Syrian government has constantly expressed its opposition to the US role in Syria, and demanded US forces withdraw. Al-Assad’s main backer, Russia, has also called for the US to leave.

  • Turkey has also made clear its opposition to US support for the YPG. Ankara considers the YPG to be the Syrian branch of the Kurdistan Workers’ Party (PKK), a designated “terrorist” group in Turkey, the US and the European Union.

  • The announcement of a Turkish military operation against the YPG in northern Syria led to the withdrawal of some US troops in October 2019.

  • Some US forces are still located in the SDF-controlled areas of northeastern Syria, such as Hassakeh and Raqqa provinces.

  • Since 2016, the US has also controlled al-Tanf base, in a remote area of Syria, near where the borders of Syria, Jordan and Iraq meet. The US presence in the base was agreed upon with Russia, and is part of a 55km (34 miles) “deconfliction zone”, which US and allied forces patrol. Russia has since called on the US to withdraw from al-Tanf.

  • There are still approximately 900 US soldiers in Syria.

  • Speaking last year, Brett McGurk, the White House coordinator for the Middle East and North Africa, said the US had four main objectives in Syria: to reduce violence, maintain military pressure on ISIL, address Syria’s humanitarian crisis, and to support Israel.

  • The US has conducted raids against senior ISIL and al-Qaeda leaders in Syria, including ISIL’s Abu Bakr al-Baghdadi. Civilians have also been killed in these attacks, according to locals.

  • “The official goal of the Americans in Syria is defeating ISIS and ensuring that ISIS does not return to the areas that have been liberated,” said Mzahem Alsaloum, a Syrian analyst. “But the presence of the Americans is also important to cut [Iranian] military and smuggling supply lines [from Iraq] … if the Iranians took al-Tanf, there would be a direct link between Tehran, Baghdad and Damascus.”

https://www.aljazeera.com/news/2022/8/24/why-does-us-still-f…

Read the whole article for a good summary of Syrian situation.

Jaak

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Personally I believe a nuclear with Iran is unlikely as Iran cozy ups with Russia. And the fact that the US is trading attacks with the Iranians in Syria. Come again-Why are we still in Syria illegally? Illegal? The U.S. military presence in Syria is unauthorized by Congress and has no international mandate. What an illogical shytty mess.

Because some love the God complex and want to shape the world.

Others love the defense profits.

And others - will allow it and cheer it as long as their guy is in power, and - they have a personal dislike for the other guy.

Sadly those who enlisted will pay the price.

Nobody tells them that in the recruiting brochures.

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