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Press review: Japan eyes oil stockpile release and Russia gets border supply-chain pains

Top stories from the Russian press on Monday, November 22nd
Oil company's reserve tanks in Japan AP Photo/Itsuo Inouye
Oil company's reserve tanks in Japan
© AP Photo/Itsuo Inouye

Nezavisimaya Gazeta: Oil importing countries poised to battle OPEC and Russia

Japanese officials began to discuss measures on releasing strategic oil reserves to the market in order to stabilize prices possibly joining US President Biden’s coalition. However, experts question the success of this plan since the global oil reserves will last only for a couple of weeks. However, during this time, oil prices may decrease by approximately $20 and provoke a weakening of the ruble. The losses in Russia’s export revenues in this case would amount to about $2.5 bln monthly.

Japanese Prime Minister Fumio Kishida confirmed the discussion of selling oil reserves in order to decrease global prices, however, he did not name any specific deadlines for making this decision. The Biden administration turned to India, China, South Korea and Japan to consider the possibility of releasing the strategic oil reserves in order to regulate and lower its prices, with India turning this request down since, according to India’s Minister of Petroleum and Natural Gas Hardeep Singh Puri, such reserves are designated for emergency situations, such as natural disasters or a war, and are useless for a price decrease.

Senior Vice President of Analysis at Rystad Energy Claudio Galimberti thinks that selling the reserves is not the right move. As TASS quoted him as saying, in order to restore the balance on the energy market, it is necessary to increase oil production while the price effect from releasing oil from the reserves is cancelled out in the absence of production growth.

Chief analyst at TeleTrade Mark Goikhman says that Washington’s position is understandable. "US President Joe Biden is highly concerned over the record high inflation in the country and mounting fuel prices. This increases household spending and limits the opportunities of developing production, and economic growth in general," he said. "Biden called on OPEC+ countries to boost production in order to increase the supply, yet exporters refused. Moreover, Saudi Arabia almost demonstratively announced a price hike of its oil for consumers in Asia, a number of European countries and the US itself," he added.

If the US proposal is implemented, the sale of the reserves will lead to an avalanche of market supply and a sweeping price drop, managing partner at BMS Group Alexey Matyukhov told the newspaper. Senior Analyst at BCS World of Investments Vitaly Gromadin thinks that OPEC’s position is more justified. "Oil prices were growing not only due to internal market factors but also because of external influences over the outbreak of the energy crisis," he said, adding that consumer countries had been selling their strategic supplies previously in order to curb price hikes.


Kommersant: Armenian, Azerbaijani leaders to meet in Brussels

Yerevan and Baku agreed on a meeting between Armenian Prime Minister Nikol Pashinyan and Azerbaijani President Ilham Aliyev on December 15 in Brussels. It was planned that the two leaders would meet in Moscow to mark the anniversary of end of the hostilities with Russian President Vladimir Putin’s mediation, however, the agreement on this anticipated meeting was not reached. Many experts think that this meeting’s failure was the cause of the aggravation on the Armenian-Azerbaijani border on November 16 which resulted in numerous casualties.

"The news about the Brussels meeting was a definite surprise and there is information that the initiative came from the Armenian side," Azerbaijani political analyst and an expert with the Valdai Discussion Club Farkhad Mammadov told the newspaper. "Additionally, we can state that Armenia refused a meeting with Moscow’s mediation to sign agreements on transport corridors and the border. The Azerbaijani position is that if the meeting in Brussels facilitates making decisions on these issues, we will not turn it down." The expert is confident that the trilateral Russia-Armenia-Azerbaijan format will remain as the fundamental one and that it has no alternatives, since Brussels does not have a legitimate mediator status between Armenia and Azerbaijan.

Armenian political scientist Benyamin Poghosyan concurs, saying that "on December 15, Nikol Pashinyan and Ilham Aliyev would have been in Brussels anyway to participate in the Eastern Partnership summit. And such meetings on the sidelines of summits are an accepted practice. I don’t think that during the Brussels meeting the sides will sign some document not coordinated with Moscow." Another Armenian political analyst Hrant Mikaelian stated that some disappointment is emerging between Russia and the conflicting parties, which has triggered the search for new formats, while Senior Researcher at the IMEMO Center for Post-Soviet Studies Stanislav Pritchin thinks that there is no competition between negotiating format. "The problem is rather different: each side hopes that the participation of the European Union will help to change the balance of power and pressure the opponent. Armenia is banking on France’s help, its old and reliable ally, while Azerbaijan hopes that the EU will take its side since it is a supplier of energy resources. The talks themselves will show whose bet is more justified."


Kommersant: Belarus-Poland border standoff causing supply chain headaches for Russia

The Foreign Investment Advisory Council addressed Russia’s First Deputy Prime Minister Andrei Belousov with a request to resolve the problem of transportation of supplies between Europe and Russia that emerged in the wake of the migrant crisis in Belarus. A 25-kilometer long bottleneck at the Bobrovniki checkpoint has formed, which is endangering supplies to Russian consumers. Major retailers encountered difficulties while suppliers warn of possible price hikes. Market players and experts do not see how the crisis can be resolved logistically and hope for a political settlement of the issue.

Oraz Durdyyev of AB InBev Efes (BUD, Stella Artois, Corona Extra) says that the situation has already caused a lack in rolling stock on this direction and in the future may result in a lack of products, disruptions in supplies and price hikes. PepsiCo notes that the border crossing dilemma continues to worsen and the growing bottlenecks will interrupt supply chains. Executive Director of the Rusprodsoyuz Association Dmitry Vostrikov adds that problems with logistics negatively impact suppliers’ profitability due to transportation sitting idle.

Meanwhile, on November 21, Polish Prime Minister Mateusz Morawiecki warned that the country was ready for a full closure of the border, and transit and trade with Belarus. Olga Fedotkina of the National Council of Logistics and Transport Experts says that "it is even difficult to imagine" the scope of damage for Russian consumers and business if the border shuts down completely.


Vedomosti: Russia’s Finance Ministry awaits EU’s decision on ‘Russian offshores’

Russia’s Finance Ministry is trying to remove the risk of recognizing Russia’s special administrative regions (SARs) in Kaliningrad and Vladivostok as "harmful" tax regimes. The Ministry hopes to reach a compromise with the European Commission in the first quarter of 2022, Deputy Finance Minister Alexei Sazanov told Vedomosti on the sidelines of the expanded meeting of the Eurasian Intergovernmental Council in Yerevan. Earlier, the European Code of Conduct Group (Business Taxation) had certain complaints about the SARs, including the discrimination of Russian companies over foreign ones.

According to the deputy finance minister, in order to satisfy EU representatives, it is necessary for the SAR’s regime to satisfy two criteria. First of all, while registering there, the company should ensure its actual presence in the region in the form of offices with employees. Secondly, the regime should be accessible both to foreign and Russian companies and the talks are currently being conducted on this issue.

Denis Spirin of Prosperity Capital Management warns that the possibility of Russian companies moving to SARs will become "the sword of Damocles" for minor shareholders since theoretically the company can completely change its corporate management, rewrite its charter and remove the rights of minority shareholders when moving to any SAR. According to him, this "can negate the success of the improvement of corporate management in Russia. It is enough for a company to make a decision to move to any SAR - and there are no guarantees for the minor shareholders."


Izvestia: Vaccination rates in Russia double

Over the three weeks of November vaccination rates in Russia doubled compared to the previous month - now no less than 400,000 people get inoculated daily, according to the official statistics of the crisis center and data from regions. On Sunday, November 21, Russian President Vladimir Putin said he got a booster shot of Sputnik Light. The head of state stressed that he was ready to participate in the trials of intranasal vaccine against coronavirus. Overall, herd immunity in the country has surpassed the mark of 50% by the weekend. The mortality in the number of regions, including those leading in terms of vaccination rates, has decreased to single digits, however the nationwide average remains high. According to experts, in order to overcome the pandemic, it is necessary to inoculate at least 80% of the country’s adult population. If the current rate of vaccination continues, herd immunity will be achieved by February.

Director of the Research Center for the Prevention and Treatment of Viral Infections Georgy Vikulov noted that the high amount of vaccine hesitancy in Russia "but we are working on this and we see that the number of people who are getting inoculated is growing. This is why, I think, by New Year’s we will have a high percentage of those vaccinated."

Infection specialists Nikolai Malyshev notes that "still half of people over 60 has not been vaccinated and all people of this age have a significant number of concomitant diseases." The compulsory vaccination of the elderly has been announced in many regions but the expert thinks that inducement mechanisms should be introduced as well. "The number of people with immunity now is about 50% but this is general statistics which also includes those who got booster shots. It is still too far from forming herd immunity that is why the incidence figures remain high," the expert said, adding that in his opinion the figure of 90% is enough to conquer the coronavirus infection.

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