MOSCOW, February 7. /TASS/. Brussels tightens the terms of its continuing financial support to prop up poorly performing proxy Kiev; the G7 countries intend to step up monitoring of Russia's oil price cap of $60 per barrel; and the IDF may be planning an assault on Rafah in south Gaza, jeopardizing Egyptian-Israeli relations. These stories topped Wednesday’s newspaper headlines across Russia.
Chief EU diplomat Josep Borrell arrived in Kiev to ease the recent harder line taken by Brussels in its mechanism for providing future assistance to Ukraine. The day before, the EU Council and European Parliament informally agreed to establish a 50 bln euro special fund to support Ukraine but with only 17 bln of that amount awarded in the form of grants, contrary to Brussels' prior practice, and the balance consisting of loans, Nezavisimaya Gazeta writes. Experts attributed the clear-cut tightening of the financial aid spigot for Kiev to the overall deterioration of the situation in Ukraine.
Ukrainian First Deputy Prime Minister and Economy Minister Yulia Sviridenko stated that the first tranche of 4.5 bln euro is likely to arrive in March, but the news was somewhat overshadowed by subsequent clarifications by EU Ambassador to Kiev Katarina Mathernova that Ukraine will be able to receive these funds only in exchange for reforms, particularly in the fields of energy, state-owned enterprises, and entrepreneurship, as well as the judicial system.
According to Pavel Seleznev, dean of the Faculty of International Economic Relations of the Financial University under the Government of the Russian Federation, this obvious tightening of conditions is due to the overall situation in Ukraine, including, of course, in the combat zone. If the situation at the front had progressed smoothly, in line with the Ukrainian leadership’s brashly optimistic media predictions last year for martial success, Washington, and subsequently Brussels, would have been quick to fork over the necessary funds to their pet proxy. However, the Ukrainian armed forces' much-hyped "counter-offensive" ultimately proved to be a miserable failure, churning up lives and gear only to gain small patches of ground and a handful of destroyed villages. Meanwhile, Ukrainian President Vladimir Zelensky dithered on holding the presidential election this year, first promising his patrons to stick to democratic norms but ultimately cancelling the vote.
Under such circumstances, which so obviously belie Kiev's fulsome professions of fealty to the triumph of freedom and democracy, Ukraine’s Western patrons are finding it increasingly difficult to justify to their citizens the need to allocate ever-increasing sums to a failing, undemocratic Ukraine. As a result, Washington lawmakers, preoccupied with their own election prospects, preferred to put pressure on Brussels to shift responsibility for Ukraine's funding onto the EU, the newspaper writes. "It is also possible that the money allocated by the Europeans could go into the accounts of US military corporations, so that they could then produce weapons, for which the Ukrainians would have to pay the EU - an ideal scheme," Seleznev remarked.
In addition, commenting on the chances of the US actually providing its promised $60 bln aid package to Ukraine, he noted that Congress is currently clearly primarily concerned with allocating funds for Israel amid the ongoing strife in the Middle East.
The G7 countries intend to step up monitoring of Russia's oil price cap of $60 per barrel, with the EU and Australia ready to approve additional measures, according to Japanese media. At the same time, Western news outlets are reporting that OPEC+ is failing to keep oil prices stable. These two news items lead to the prediction that oil prices will soon fall and that Russia will suffer the most; however, experts told Rossiyskaya Gazeta that they believe there is no serious chance of Russian oil prices falling.
The United States is working hard to lower oil prices before the presidential election, as they affect the cost of fuel at local gas stations, hitting the budgets of ordinary voters. As a result, reports about OPEC+'s lack of unity or the alliance's ineffectiveness are intended to derail the agreement and lower oil prices, the newspaper writes. But there is another side to the story: much of the oil that is expected to come onto the world market soon will be produced from hard-to-develop fields such as shale and offshore production sites.
According to Oleg Abelev, head of research at Ricom-Trust Investment Company, production will increase if the weighted average price of oil remains between $65 and $70 per barrel. Ultimately, it depends on the interests of oil producers both abroad and in the Arabian Peninsula. If oil prices begin to rise as a result of Saudi Arabia, Russia and other OPEC+ members reducing production, US oil producers will immediately have a chance to expand production, he told the newspaper.
As for Russian oil, the deputy head of the board of directors of the Association of Reliable Partners, Dmitry Gusev, believes that if the G7 nations were confident in their ability to do without Russian oil, they would simply impose a comprehensive embargo on its purchase. However, since they realize that without Russian resources the market would "collapse," all of these tightening measures are being implemented only to reduce Russia's revenues. And until Venezuela, Iran and Libya fully enter the oil market, the analyst believes that there are no serious prospects for Russian oil price reductions.
Israel may begin an attack on Rafah, a major city in the southern Gaza Strip in close proximity to the Egyptian border, where over 1.5 mln refugees are sheltering. This could lead to a deterioration in Tel Aviv’s relations with Cairo, which is concerned about the relocation of Palestinians on its territory. In an interview with Izvestia, a representative of the Israel Defense Forces (IDF) did not rule out the possibility of hostilities escalating under such circumstances, stating that the military will obey the orders of Israel’s political leadership to fulfill all of their objectives, including military actions in the Rafah zone.
The IDF would not rule out a potential start of offensive action in Rafah. "Military operations are concentrated in Khan Yunis and the northern half of the Gaza Strip, but the army is prepared to intervene anywhere necessary to achieve two objectives: the destruction of Hamas and the release of captives. Our activities have been approved by the country's political leadership and military cabinet," IDF Spokeswoman Anna Ukolova told Izvestia.
The IDF's actions could cause major tensions between Egypt and Israel, as the spread of violence in Egypt's border areas may prompt the mass migration of Palestinians into Egypt’s Sinai Peninsula, which Cairo strongly opposes.
"The US is now doing everything it can to prevent [Israeli Prime Minister Benjamin] Netanyahu from implementing another plan [for offensive military action], as this has extremely dangerous consequences. It will definitely not be possible to carry out the resettlement [of Palestinians] from the Gaza Strip to Egypt, because no one except Israel supports this," Middle East expert Elena Suponina told Izvestia.
According to the expert, such actions by the IDF could ultimately risk the severing of diplomatic ties between Israel and Egypt, the first Arab country to re-establish relations with the Jewish state. Suponina believes that Netanyahu's policy is only intensifying and inflaming the issue further rather than bringing the parties closer to a solution.
The first Project 636.3 submarine from the Russian Navy’s arsenal has docked in Kamchatka, according to Russian Defense Ministry officials, as reported by Izvestia. The sub’s crew is currently carrying out exercises to better understand the North Pacific maritime theater, but similar submarines will eventually be stationed in Kamchatka to patrol off the coast of the remote Far Eastern peninsula on a permanent basis, Izvestia writes. Project 636.3 submarines are regarded to be among the quietest, earning them the nickname "Black Holes" since they are virtually invisible to hostile surface and undersea forces, giving them a significant stealth advantage over rival naval forces. According to experts, they will be able to adequately guard the Russian Pacific Fleet’s stable of Borei class (Projects 955 and 955A) strategic missile carrier submarines currently stationed on the peninsula.
Military expert Dmitry Boltenkov told the newspaper that the primary mission of the multi-purpose boats will be to ensure the secure deployment and entry of strategic missile carrier submarines into the sea for long-distance patrols far from Russian shores.
"This is their main task: to prevent the US [Navy] from intercepting our strategic cruisers. And the Project 636.3 boats are quite suitable for this in terms of their characteristics. They have good maneuver capabilities and a variety of armaments. The challenge is how they will perform in the [Northern Pacific] region's severe hydrometeorological conditions," he said.
The 636.3 series of diesel-electric submarines are meant to attack submarines and surface ships and protect naval bases, sea coasts, and communications, as well as to conduct reconnaissance and other activities.
"We have been successfully building boats under this project for a long time. And not just for ourselves. Many of them were purchased by foreign navies, indicating that the boat is reliable. The number 3 after the period in the project number indicates that [the design] has been thoroughly upgraded three times. The boat itself is good and very silent; it's no coincidence that it's been named the ‘Black Hole.’ With each modification, it gains additional armaments, such as Caliber missiles, torpedo weapons, and new radio electronics, which considerably improve its combat capabilities," Russian Navy Captain (Ret.) Igor Kurdin, sub expert and chairman of the Submariners' Club, told Izvestia.
Russia increased gas shipments to Europe via pipelines in January by 41% over the same month last year, totaling 2.52 bln cubic meters, according to calculations by Vedomosti using data from Gazprom. According to experts, this was facilitated by frosts and lower fuel prices.
In January, deliveries in transit across Ukrainian territory to the European Union and Moldova amounted to 1.29 bln cubic meters, which is 32% more than the amount transported through Ukraine's gas transportation system in January 2023. Another 1.23 bln cubic meters of gas was provided by Russia in January via the Turkish Stream pipeline system for EU consumers. Compared to January 2023, Gazprom's export volume in this direction rose by 51%.
In January 2024, frosts in northwestern Europe increased demand for gas, resulting in a relatively quick fall in reserves, according to Ronald Smith, senior analyst at BCS World of Investments. At the same time, the first half of January last year in the EU was unusually warm, Finam Financial Group analyst Sergey Kaufman told the newspaper.
According to Ekaterina Krylova, managing expert at the PSB Analytics and Expertise Center, the volume of Russian gas shipments to Europe in the coming months would be determined by local air temperatures. Supply volumes may be lower than in January because unusually cold weather is not forecasted, she added. Igor Yushkov, a leading expert at the National Energy Security Fund, noted that customers in the EU will keep an eye on spot gas prices, and demand for Gazprom gas will be affected by them. According to Kaufman, the current level of Russian gas supplies may last through the winter, but export volumes will be lower in the second half of the year.
Gas prices in Europe decreased last fall due to high storage levels and steady supplies of liquefied natural gas (LNG). As of February 6, March gas futures were trading at between $309 and $323 per 1,000 cubic meters. According to Finam, there are currently no prerequisites for a large increase in gas prices in Europe, and by the conclusion of the heating season, prices may fall to $300 per 1,000 cubic meters or lower.
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