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Press review: How to size up Macron’s new European ‘club’ and US may ease up on Caracas

Top stories from the Russian press on Friday, October 7th
French President Emmanuel Macron

Izvestia: EU likely to feel consequences of new Russia-targeted sanctions

The newest EU-approved package of anti-Russian sanctions has more of an informational and psychological impact rather than real economic repercussions, experts polled by Izvestia said. Brussels is not refusing to buy Russian gas while an oil price cap won’t have a significant impact if India and China do not support this bid, the analysts think. Russia’s IT sector can still continue to function. The main possible negative effect is the lowered oil production yet market players think that Russian companies can compensate for the losses by rising prices. That said, according to analysts, Russia may react by expanding the list of products for ruble-only sales. According to Russian Deputy Prime Minister Alexander Novak, the government has not yet responded with any tit-for-tat measures, since Russia needs to study the final version of the European Commission’s document in order to determine its further steps.

The most substantial measure for Russia is the cap on oil prices combined with the upcoming December oil embargo and the February ban on petroleum products, says Head of Macroeconomic Analysis at Finam Olga Belenkaya. She does not rule out that this may lead to a production decrease of 1-1.5 mln barrels per day and may facilitate a discount of Russian oil against the global price.

Overall, Russia’s response to the EU sanctions may be unprecedented, for example, it may involve a ban on deliveries of Russian oil and gas to an entire range of countries and market players or a significant expansion of ruble-only exports, notes BitRiver Financial Analyst Vladislav Antonov. The deficit of gas and oil supplies in the EU is going to continue to tighten the screws on the economies of Western European countries, weakening the social stability and competitiveness of its real sector, he added.

Additionally, under the current conditions, Russia may redirect its raw materials to China, India and other countries of the Asia-Pacific region since their markets are more attractive than Western ones for the long-term prospective, Director General of the Institute for Energy Problems Bulat Nigmadulin says.


Nezavisimaya Gazeta: Ukrainian army plots another assault on nuke plant

On the eve of another visit by Director General of the International Atomic Energy Agency (IAEA) Rafael Grossi to Kiev, the situation around the Zaporozhye nuclear power plant has escalated again.

According to local officials, the Ukrainian military is plotting yet another attack by an assault team in a bid to take over the nuclear plant.

Experts maintain that so far, risks around the facility remain and the station remains in limbo despite earlier steps by Moscow on the legalization of its status.

Commenting on the situation unfolding around the nuclear facility, head of the Center for Political Information Alexey Mukhin noted that the risks and the issues still remain. "Apparently, Ukrainian and UK troops intend to mount an escalation around the nuclear power plant. Despite the fact that the ZNPP is currently in the unconditional responsibility zone of the Russian Federation with everything it ensues, including the protection of its safety," the expert said, further expressing hope that common sense would prevail.

Igor Yushkov, leading analyst at the National Energy Security Fund, argued that it is not excluded that in reality, Grossi’s visit might not lead to any significant changes, yet each side will interpret the event in its favor. That said, he added that it is quite logical that the nuclear facility was transferred to Rosatom, Russia’s nuclear agency that was the legal successor to the USSR’s nuclear industry which should be tacitly approved by the IAEA since this transfer would ensure proper control. On the other hand, this should also resolve the legal issue of managing the power plant which was earlier located on the territory controlled by Russian troops but was administered by Ukraine’s Energoatom.


Izvestia: Is Europe’s new discussion platform a ‘cocktail party’ with empty promises?

On October 6, the first meeting of the European Political Community (EPC) took place. In addition to 27 leaders of EU member states, representatives of 17 other countries participated, including Ukraine and Turkey. As expected, Russia and Belarus were not invited. European lawmakers, interviewed by Izvestia, are confident that this format won’t bring EU candidate members and other countries in the region closer to the EU, but will remain another venue for empty promises.

According to European Parliament member from Slovakia Milan Uhrik, this format would only support the powers that be, given the statements made by those invited. German MEP Gunnar Beck thinks that the EPC is an attempt to rally states outside of the EU around its foreign policy. He notes that the majority of those invited do not carry any serious political weight with the exception of the UK, which has an even more critical attitude towards Russia. According to the legislator, the EU thinks that it can bully Moscow using sanctions while ignoring the fact that the EU itself is experiencing major economic problems.

MEP delegate from Croatia Ivan Vilibor Cincic describes the get-together as a "cocktail party" without expecting any practical results. According to him, the goal of this project is to demonstrate political unity and to put pressure on those who disagree with the EU’s anti-Russian policy, for example, on Turkey and Hungary. Instead of trying to hear out Moscow’s position, they are simply isolating it, he concluded.


Vedomosti: US suggests relaxing sanctions against Venezuela to boost oil exports

Washington may ease sanctions against Venezuela in order to increase oil supplies to the global market. However, experts insist that this won’t compensate for the reduction in oil output from the OPEC+ deal.

Negotiations between the US and Venezuela are directly related both with the OPEC+ decision and with the EU’s plans to ditch Russian oil before the end of 2022, says Alfa Bank Senior Analyst Nikita Blokhin. Venezuelan heavy oil is the most attractive alternative for consumers in the US and Europe since its properties are close to Russia’s Urals brand, he notes. Most likely, the talks initiated by the US are held in preparation for the introduction of a price cap on Russian oil in December which may lead to a reduced supply of sulfur crude oil on the global market, the expert thinks.

It is doubtful that even by reaching some political deals with Venezuelan President Nicolas Maduro, the US would be able to offset the OPEC+ led reduction in output with Venezuelan supplies, says Commodity Market Analyst at Otkritie Investment Oksana Lukicheva. "Venezuela’s entire production is less than the reduction of OPEC+ quotas," she notes. In her assessment, Venezuela’s August production amounted to merely 0.7 mln barrels per day.

Currently, the political situation of Maduro and his allies is much stronger than in 2019 and even in 2021, since the opposition has been broken apart, according to Deputy Director of the Russian Academy of Sciences’ Institute of Latin American Studies Dmitry Rozental. However, the economic situation in the country remains very critical while its oil industry is in need of Western technologies and investments, in addition to legal exports. Therefore, Maduro is interested in Washington easing the sanctions, supplies to the US and some normalization of relations in exchange for concessions, the limits of which so far are difficult to assess, the expert says.


Nezavisimaya Gazeta: Russian wheat not welcome in foreign ports

Russia will gather a record harvest this year, but Moscow still has problems exporting its products. Importers are shunning Russian wheat preferring Ukrainian grain. Russian exporters have logistics problems since its grain-carrying vessels are forbidden from entering some ports. The surplus of agricultural products in the country is growing which leads to lowered prices on the domestic market as well. Experts forecast that difficulties with grain sales are also likely to affect next year’s results.

The main issue with Russian grain involves logistics, yet there are others. "Not all ships are ready to enter Russian ports. There is another problem. For longer than half of the year, there was a partial ban on grain exports from Russia. This prevented contracts from being signed at the beginning of the year since no one could tell whether the ban would be extended," Executive Director of the Capital Markets Department at Iva Partners Artyom Tuzov says, adding that Ukrainian grain also lowered demand, being a cheaper alternative.

"With a record-high harvest, it is impossible to sell wheat to other countries since maritime export is limited while rail tariffs are too high. As a result, the surplus of grain in Russia leads to lower prices," Finam Analyst Alexander Potavin adds.

Some market players, however, advise not putting off buying Russian grain. "As soon as opportunities of the Istanbul deal on Ukrainian supplies are exhausted, the market won’t go anywhere, demand for Russian resources will resume," says President of the Russian Grain Union Arkady Zlochevsky. According to him, the drop in grain prices is temporary, triggered by the Ukrainian deal which will not lead to further global decreases.

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