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Press review: Ukraine peace summit has no leg to stand on and OPEC+ extends oil cuts

Top stories from the Russian press on Monday, June 3rd

MOSCOW, June 3. /TASS/. Ukraine peace summit in Switzerland not making headway as hoped; OPEC+ extends oil production cuts; and Russia climbs to 4th place in global GDP rankings. These stories topped Monday's newspaper headlines across Russia.


Izvestia: Majority of global leaders to snub Ukraine conference in Switzerland, dealing blow to Kiev

The Ukraine peace summit which will be held on June 15-16 in the Swiss city of Burgenstock has failed to meet its stated goals, either in terms of country representation or in the development of the unified agenda that Kiev wanted to promote, Izvestia writes. Instead of focusing on how to build the negotiation process, Ukraine is preoccupied with its own self-interests. Meanwhile, Switzerland, the summit's host, has lost all neutrality, Russian Foreign Ministry Ambassador at Large Rodion Miroshnik told the newspaper.

"By joining the unilateral anti-Russian sanctions, Switzerland has lost its neutrality. The country's government admitted that it was involved in the conflict and confirmed which side it was on. In such circumstances there is no need to discuss neutrality and impartiality," Rodion Miroshnik told Izvestia.

Initially, 160 nations were invited to the summit, including countries of the global south, as Kiev wanted wide representation to present a united global front that would force Russia to accept peace on its terms. However, only 70 to 80 countries responded, and the vast majority of heads of state will not attend, Izvestia writes. China has so far refused to send delegates. The presidents of Brazil and South Africa will both be absent. India will send delegates, but they will be lower-level officials. In addition, the summit will be missing Ukraine's main ally, US President Joe Biden.

Seeing that the summit wouldn’t have many high-level attendees, the Kiev authorities reduced the meeting's agenda to three minor issues - food and nuclear security, as well as humanitarian concerns, Izvestia writes.

In this way, Kiev is attempting to salvage the summit from being a complete failure. What's more, Ukraine's armed forces went into June with relatively poor results, making it hard for Kiev to dictate terms to Moscow, senior researcher at IMEMO RAS Dmitry Ofitserov-Belsky told the newspaper.

"Seeing as how Ukraine is unable to repel the Russian offensive and replenish the ranks of its own armed forces, ultimatums to Russia do not seem appropriate to anyone," the analyst told Izvestia.

At the same time, he noted that Washington and London are not concerned about whether or not the summit is successful. "What matters is that it effectively puts any negotiations on the backburner. The West has clearly chosen to prolong the conflict and eliminate any chance for a quick resolution. It’s hard for me to believe that Zelensky, losing support from the West, did not at least entertain the idea of entering into a dialogue with Moscow, if only to save his own hide," the expert said.


Izvestia: OPEC+ countries extend oil production cuts

On June 2, OPEC+ member countries held a ministerial meeting and decided to extend the organization's existing oil production quotas until the end of the Q3 of 2025. The alliance's total production level is expected to reach 40.46 mln barrels per day (bpd), without any additional restrictions by individual countries. According to analysts interviewed by Izvestia, the measure could strengthen prices to $80-90 per barrel, a range member countries are comfortable with.

Meanwhile, oil production levels for Russia and Saudi Arabia did not change and remained at 9.9 mln bpd and 10.5 mln bpd, respectively. The maximum output level for the United Arab Emirates (UAE) was proposed to be increased by 300,000 barrels per day to 3.5 mln.

"The measure will strengthen prices at $80-90 per barrel, which is considered a comfortable price for countries that supply raw materials," Deputy Chairman of the board of the Association of Reliable Partners Dmitry Gusev told Izvestia.

Maintaining the current status quo, i.e. extending current quotas until the end of the year can be considered a success for OPEC+, Associate Professor at the Financial University Valery Andrianov told the newspaper.

OPEC+ currently accounts for 42% of global production of liquid hydrocarbons, Senior Analyst at Pervaya Management Company Anna Butenko noted. "However, despite the reduction in market share, the influence of OPEC+ on prices is still high. Moreover, the growth of shale oil production in the United States is slowing down significantly and may already be approaching its peak," she said.

"The low rate of replenishment of US reserves may strengthen oil prices," Dmitry Gusev noted. According to Anna Butenko, a seasonal increase in demand for fuel with the start of the summer holiday season may send prices above $85 per barrel.


Vedomosti: Russia becomes world’s fourth-largest economy

Russia has surpassed Japan and moved into 4th place in the global ranking of countries in terms of GDP at purchasing power parity (PPP), according to the results of the International Comparison Program (ICP) conducted by the World Bank. The report compares economies based on the results of 2021, Vedomosti writes.

ICP estimates showed that in 2021, the Russian economy accounted for 3.8% of the global PPP figure of $5.7 trillion in relative prices. The country surpassed Japan (3.7% and $5.6 trillion) and Germany (3.4% and $5.2 trillion), while India (7.2% and $11 trillion), the US (15.5% and $24 trillion), and China (18.9% and $29 trillion) bettered Russia in 2021.

Russia’s Ministry of Economic Development commented on the rating, saying that the growth was facilitated by operational and systemic measures, aimed at, among other things, supporting businesses, regions, and citizens during the period of anti-COVID restrictions and Western sanctions.

The Russian economy remains one of the largest in the world, First Deputy Director General of the Center for Strategic Research Boris Kopeikin told Vedomosti. The economic decline at the end of 2022 was small, and last year GDP grew at a rate above the world average, with Japan and Germany showing sluggish dynamics in this period, he added. Therefore, if the rate of economic growth meets government expectations, the chances of remaining in 4th place are extremely high, the expert believes.

Japan and Germany were hurt by the sanctions they imposed on Russian raw materials these countries, as they led to a significant increase in costs, a decline in production and a virtual recession, while Russia found access to friendly markets, replacing this loss, stock market expert at BCS World of Investments Mikhail Zeltser told the newspaper.

Going forward, Russia's place in the rating will depend on the foreign policy situation, in particular on the effectiveness of secondary sanctions against foreign companies that continue trade and economic interaction with Russian enterprises, Head of the Russian Center for Competence and Analysis of OECD Standards at RANEPA Antonina Levashenko told Vedomosti. In addition, financial support for Russian companies from government institutions will play an important role, she added.


Vedomosti: Right-wing Israeli ministers threaten to collapse ruling coalition

Israeli Finance Minister Bezalel Smotrich and National Security Minister Itamar Ben-Gvir, representing the conservative camp, have threatened to leave Benjamin Netanyahu's government if he agrees to US President Joe Biden's plan for a cease-fire in the Gaza Strip. At the same time, experts told Vedomosti that even if Tel Aviv rejects the US proposal, Washington will not impose serious sanctions on its key ally in the Middle East.

According to Smotrich, members of his team will never agree to the withdrawal of the Israeli army from the Gaza Strip, the return of displaced Palestinians to the north of the enclave, or the release of "terrorists" from Israeli prisons. The minister called for continuing the war until victory and National Security Minister Ben-Gvir echoed these sentiments.

At the same time, the moderate Israeli opposition welcomed the US President's proposal. The leader of the center-left Yesh Atid party Yair Lapid wrote on his X page that he was ready to join Netanyahu's government if his far-right partners decided to leave. President of Israel Isaac Herzog is also ready to accept Biden's plan.

Biden's Middle East initiative is aimed at winning points with voters ahead of the US presidential elections, senior researcher at the Center for Comprehensive European and International Studies of the HSE University Lev Sokolshchik told Vedomosti. According to the expert, continuing the war in the Gaza Strip hurts the president's popularity - supporters of Palestine regularly protest against the inconsistent and ineffective policy of the US government in the Middle East. At the same time, the current administration is interested in ending the hostilities in order to bank this as a win for the Democrats, the expert noted.

However, Sokolshchik noted that Washington will not impose serious sanctions on Tel Aviv if it rejects the US proposal. Israel is a key ally and partner of the United States in the Middle East, and the US will under no circumstances reconsider their relations with it, the expert added.


Kommersant: Shipping rates from China rise sharply amid container shortage

China, the world's largest exporter of consumer goods, is running out of empty containers. Industry sources told Kommersant that this is largely due to the conflict in the Red Sea, as well as an increase in imports to Europe and Russia. As a result, the cost of renting containers has skyrocketed, making it almost impossible to find free containers this June, while its manufacturers are overwhelmed with orders. Since the beginning of the year, spot rates for transportation have doubled - in May alone they rose by 50%, and market participants expect further price increases.

An additional factor in the price growth is the increase in trade turnover between Russia and China, which required more containers, Delo group of companies told the newspaper. There is a noticeable increase in supplies not only to Russia, but also to Europe, Director of the logistics department at ModernWay Yulia Badadyan added. According to her, China Railway is planning to redirect express container trains to the European direction.

The situation in Russia is also affected by the fact that it's impossible to transport containers to the East. According to the Delo group of companies, the shortage of containers from Russian operators in China was caused by restrictions on exports to ports in the Far East and overloading of the fleet in the Baltic Sea and the Azov-Black Sea basin. Tens of thousands of empty containers, which are needed in China but cannot yet be evacuated, have accumulated in western Russia. According to Mikhail Zvyagintsev, founder of TEK Operator, the capacity constraints of Russian Railways make it difficult for Russian players to return export containers. According to him, there are currently more imports arriving than exports leaving, resulting in a significant imbalance in the container fleet.

According to Director for international transport operations at FM Logistic in Russia Yaroslav Belousov, a further increase in rates in the coming month is inevitable for all types of cargo transportation. At the same time, President of customs and logistics broker KVT Yulia Shlenskaya believes that by mid-June, a number of market participants predict a further increase in rates by 20-30% from the current figures.

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