Preamble engagement NATO: “Russia struck a ship of Romania” – Moscow has extended the naval blockade: End of the Black Sea and the Danube to Kiev!
Over 50 ships have been stranded on the Danube
A Romanian ship was hit during the Russian bombardment in the Ukrainian port of Reni on the border with Romania, Bucharest announced today.
The announcement of the Romanians is at least suspicious as it comes at a time when various NATO “Hawks” are proposing NATO ships to accompany the merchant ships and “break” the Russian naval blockade imposed by Russia.
However, the Russian naval blockade in Ukraine has expanded as it now includes both the Black Sea and the Danube!
The Russian military continues to methodically cut off Ukraine from access to the sea, denying it the ability to receive aid by sea.
Over 50 ships are stranded in the Danube River.
Watch video of the Russian bombings
Romania: Our ship was hit!
“As a result of the shelling by the Armed Forces of the Russian Federation in the port of the city of Reni, a Romanian merchant ship was damaged,” the Romanian Foreign Ministry said.
Previously, the Romanian media had not made any mention of a “struck ship”. Instead, they argued that Romanian ships in port were not damaged.
Now, however, they are reporting that a ship was damaged, but the nature of the damage was minor and the ship continued its journey, according to the Romanian press.
We remind you that on the evening of July 24, the Russian Armed Forces bombarded the port of Reni on the Danube River. As a result of the strikes, the oil warehouse caught fire, and weapons and ammunition stored in the port were destroyed.
The strike in Reni was perhaps the first strike on Ukrainian facilities located right on the border with the NATO country.
For the Armed Forces of the Russian Federation, strikes on the Danube port infrastructure of Ukraine are of great importance. After all, Kiev clearly expected to use the Danube ports as an alternative to the Black Sea if further operation of the port infrastructure in Odessa became impossible.
Trouble in Britain – The Russian naval blockade is expanding
The possibility that Russia is preparing “something big” in the Black Sea, provoking new tensions in the region, the British Ministry of Defense points out, as it appears from the daily bulletin published by its intelligence services.
The British Ministry of Foreign Affairs estimates that Russia will try to impose a blockade from the sea on Ukraine, in order to prevent the export of grain from Ukrainian ports, such as for example through Romania, which has been offered for this purpose.
Specifically, the intelligence services of the British ministry report:
“The Russian Black Sea Fleet has changed its stance since Russia withdrew from the Black Sea Initiative (BSGI), preparing to impose a blockade on Ukraine.
The modern corvette SERGEY KOTOV, has been deployed in the southern Black Sea, patrolling the shipping area between the Bosphorus and Odessa (this is the warship which, according to the Ministry of Defense of Russia, became the target of an attack by Ukrainian USVs – unmanned surface vessels).
There is a realistic possibility that it will be part of a preparatory group to intercept merchant ships that Russia believes are headed for Ukraine.
The BSGI Agreement has moderated the involvement of the Black Sea Fleet in the war: but now there is the possibility of an increase in the intensity and scope of violence in the region.”
Watch video of the Russian bombings
Russian Media: Russian Forces May Repeat and Escalate Strikes on Danube Ports
Russian media note the following:
“On the night of July 24, Russian units attacked a number of Ukrainian infrastructures, one of which was the port at Reni on the Danube near the border with Romania.
The city of Reni, located on the Danube, is a transshipment base for oil products for Ukrainian refineries. The town has grain sheds and oil tanks, as well as a cargo port.
The successful attack on the Reni terminals testifies, first of all, to the ability of the Russian Armed Forces to strike targets related to the grain agreement, regardless of their proximity to the sea or their location deep in Ukrainian territory.
Russian units used Geran kamikaze drones during the attack. Considering the remote location of Reni from the line of contact, the destruction of targets in this city indicates the ability of the Armed Forces of the Russian Federation to carry out high-precision strikes.
Thus, the Russian military can easily repeat and escalate such attacks.
It is important to note that the port of Reni has a large oil loading terminal to store fuel coming from Europe. In addition, petroleum products are transported from the Reny-Main station to the front line.
In addition, Izmail was also hit. Here is a major international port on the Danube River, capable of receiving seagoing vessels up to 150 meters in length and with a draft of up to 7 meters. The port is an important link in the supply chain of Western arms to Ukraine via Romania.
Reports are coming in that Russia has launched 12 TU-95 aircraft carrying missiles for Ukraine
If each aircraft is carrying a full load, that is up to 96 cruise missiles.
Air Raid Sirens are sounding throughout the red shaded areas of Ukraine shown on the map above. Explosions likely to follow.
UPDATE 11:31 AM EDT —
13 Russian Tu-95MS and a number of Tu-160M Strategic Bombers are currently noted Airborne across Western Russia heading towards “Launch Zones” over the Caspian Sea.
A Large Missile Attack on Ukraine _SEEMS_ Imminent.
UPDATE 11:34 AM EDT —
Preliminary launches of X-101/555 missiles from Tu-95 from the Caspian direction.
CONFIRMED! Initial Detection by the Ukrainian Air Force of Cruise Missile launches by at least 12 Russian Tu-95MS Strategic Bombers over the Caspian Sea; the Missiles should be entering Ukrainian Airspace within the next hour.
UPDATE 11:38 AM EDT —
ADDITIONAL MISSILE ATTACKS NOW TAKING PLACE! High-speed missiles entering Ukraine from the north, Ukraine’s air force says.
These are DAYLIGHT launches, not something the Russians usually do.
UPDATE 11:40 AM EDT —
Cruise Missiles Flying towards Kharkiv, Donetsk, Dnipropetrovsk .
Possible direction – Kremenchuk, Kropyvnytskyi!
Explosions are reported in Berislav district of Kherson region and in Kharkov.
UPDATE 11:43 AM EDT —
Right now, Ukrainians are in a panic that has long crossed the line of hysteria.
Rockets over the Kirovograd region towards Kiev;
More missiles in the direction of the Vinnitsa region;
Rockets over the Zhytomyr region;
Zhytomyr region Powerful explosions;
Borispol, Kiev region, Explosions; Zhytomyr region.
Detonation of two warehouses with ammunition.
UPDATE 12:07 PM EDT —
Apparently, the Russian Air Force took significant steps to deceive the Ukrainian air defense; today’s missiles are constantly changing course in mid-flight!
Russian cruise missiles are flying to Vinnytsia, Mykolaiv and Odesa regions, — Ukrainian Air Force.
Explosions reported in Dnepropetrovsk region.
The second wave of Russian missiles is entering from the East.
Cruise missiles on the approaches to Vinnytsia, Mykolaiv, and Odesa regions!
Explosions Reported in Dnepropetrovsk and Kirovograd Regions
It appears that a portion of the Iskander missiles have successfully struck their intended targets.
The activation of the air raid alert following the initial strikes indirectly confirms the accuracy of the hits on these targets.
Moreover, there are indications that a ballistic missile strike targeted an assembly shop in Kharkov, which was allegedly involved in the production of drones.
As for the cruise missiles launched from the Caspian region, they have not yet reached their intended destinations.
There is speculation that these missiles could potentially target certain sites belonging to the Armed Forces of Ukraine in the Khmelnitsky and Vinnitsa regions.
NEW: A group of missiles is moving along the border with Moldova in the direction of Khmelnytskyi region!
UPDATE 12:13 PM EDT —
Multiple explosions heard in Khmelnytskyi region
UPDATE 12:25 PM EDT —
Missiles entering Lviv.
Lviv region advised to take cover immediately, missiles inbound.
Volyn and Rivne regions. Missiles also fly towards you.
COURSE CHANGES – AGAIN: Several RU cruise missiles turned from Lviv to Volyn region NOW! Some rockets in the Ternopil region made a 180-degree turn.
A group of missiles from Ternopil Oblast changes course to Zhytomyr Oblast, another group in the direction of Lviv Oblast and Volyn Oblast.
UKRAINE authorities in panic, now hysteria: screaming to citizens “Missiles constantly change their flight path. Stay in shelters!”
UPDATE 12:46 PM EDT —
Russian “Dagger” missiles heading in the direction of Kyiv!
(NOTE: Today’s ongoing missile barrages appear to be the largest and longest-sustained attack since the Russia-Ukraine conflict began. Ter for months, we were all told “Russia is running out of missiles.” HMMMMM. Looks like the people telling us that were . . . ahem . . . wrong.)
AT LEAST FOUR (4) HYPERSONIC “KINZHAL” MISSILES HAVE BEEN LAUNCHED AND APPEAR HEADING TOWARD KIEV.
Iskander missiles have JUST BEEN launched from the Bryansk region Russia.
***** FLASH *****
Multiple reports coming in claiming land-to-land BALLISTIC MISSILE LAUNCHES have taken place inside Russia, heading toward Ukraine.
UPDATE 12:57 PM EDT —
Explosions heard once again in the City of Khmelnytskyi in Western Ukraine.
UPDATE 1:13 PM EDT —
The attack seems to have subsided. No additional missiles are being tracked in, or toward, Ukraine.
Unconfirmed Reports that Starokostiantyniv Air Base in the Khmelnytskyi Region of Western Ukraine has been struck by at least 5 Russian Cruise Missiles. This Base is Home to the 7th Tactical Aviation Brigade who operate Su-24 Tactical Bombers which are claimed to be the __ONLY__ Ukraine aircraft capable of utilizing “Storm Shadow” Air-Launched Cruise Missiles provided by the UK and France.
If this base and its planes have been put out of commission, then Russia achieved multiple wins; knocking out more Ukraine air power and HALTING the ability of Ukraine to use STORM SHADOW missiles, anywhere in the country.
Reports are that this is attack was focused on NATO Assets, Supplies, and Command Centers inside Ukraine, which would explain the daylight strikes.
Two weeks ago we reported that with a barrel of Urals about to rise above $60, the “Russian oil price at key port was about to breach sanctions cap“, which – if the sanctions were strenuously enforced – meant that there would be a sharp drop in supply.
Fast forward to today when, as the WSJ reported, the price of Russia’s most coveted crude finally traded above the western price cap imposed to starve Moscow of funds for the war in Ukraine (but not really, because starving the world of Russian oil has long been viewed as a far more dangerous outcome), resulting in a very distinct “victory” for Moscow in the “fight for influence over global oil markets.”
It is the first time that the price for its flagship Urals grade of oil has breached the $60-a-barrel limit since the U.S. and its allies introduced the novel sanctions policy last December, according to commodities-data firm Argus Media, and – as the WSJ clarifies – it is a sign that the Kremlin has succeeded, at least in part, in adjusting to the restrictions.
As a reminder, in late 2022, companies in the Group of Seven advanced democracies were allowed to transport and insure Russian crude only if the price is below $60 a barrel. There are separate caps for refined products. The idea is that Moscow will sell petroleum at lower prices because it needs Western services to export its oil, thus keeping commodity inflation low.
The cap is part of a Western economic-pressure campaign and targets Russia’s most important revenue source. It is meant to bleed the Kremlin’s war coffers while encouraging Russian producers to keep sending petroleum to market so as not to foment inflation around the world. However, in a world where Russia’s 7 million of barrels of daily oil exports are suddenly pulled from the market, inflation would explode as the price of oil would promptly soar, we learn just how toothless western sanctions have been… and were meant to be.
One sign that the financial squeeze on Moscow might be relenting: The discount for Urals, compared with benchmark Brent, has narrowed to $20 a barrel. The gap is still far wider than before the war, but it has halved since January.
Meanwhile, the higher prices will bolster Russia’s oil-export revenues, which last month dropped to just over half their level from a year ago, according to the International Energy Agency, leading to more money available to fight the war in Ukraine just Zelensky’s counteroffensive is about to collapse. Russia’s Urals crude, named after the mountainous, oil-rich region, has also gotten an extra boost from high demand in Asia, where Russian producers are elbowing aside Saudi oil.
With Urals, Sokol and ESPO trading now above the $60-a-barrel level, we should **assume** that all Russian crude is now flowing into the global market without using Western banking, insurance and shipping. Either that, or “attestations” are getting rather creative | #OOTT
— Javier Blas (@JavierBlas) July 24, 2023
Western sanctions strive – at least on paper – to use Russia’s longstanding dependence on European shipping and insurance as leverage to contain the income Moscow fetches from crude. Climbing prices suggest Russia’s push to assemble an alternative network of tankers to which sanctions don’t apply is eroding Western influence over its prize export, said Sergey Vakulenko, an analyst at the Carnegie Russia Eurasia Center and former oil executive in Russia.
“This was an evolutionary process, and now we just see its results,” said Vakulenko. “Russian oil companies…put quite a lot of effort into staying in business and earning money. They have proven themselves to be capable operators.”
According to the WSJ, traders said Russian producers recently showed little desire to negotiate prices at which Western players could stay in the market. That is a shift since Urals last neared $60, in April.
To be sure, Russian companies are likely to need Western ships and insurance for some time to export some of the more than seven million barrels of petroleum they sell overseas daily. Some analysts say that gives the U.S. and Europe significant—though waning—leverage, and that they could step up the financial pressure on Moscow by lowering the cap. However, the growing influence of the gray fleet if “mystery” middlemen– which has shown remarkable stoicism to Washington’s sanctions threats – is what has given Putin all the leverage he needs. In the end, the $1 billion monthly windfall talks, and Biden’s bullshit walks.
Unable to accept defeat, Washington officials call the price rise a Pyrrhic victory for Moscow and point to the many obstacles that have been thrown in Russia’s way.
“Fundamentally, the price cap is holding down Russia’s revenue significantly, while continuing to create a world in which global markets are being supplied with Russian oil,” Deputy Treasury Secretary Wally Adeyemo said in an interview. “Our goal is to continue to increase the cost for Russia in order to make sure they have less money to fight their illegal war in Ukraine, and that’s happening every day.” Spoiler alert: what is happening is that Russia is not only countering Ukraine’s “counteroffensive” but is now making the most money per barrel sold to foreign buyers in all of 2023.
And now that the western sanctions have shattered, the blame game begins: critics say allies started with the cap too high. Ukraine, backed by close allies including Poland, has lobbied to reduce it. But disagreements inside the European Union and concern about gas prices in Washington stymied them.
Instead, according to the WSJ the U.S. and EU have focused on tightening enforcement. A focus: The laundering of oil through swaps between ships at sea. Fraudulent documentation and side payments have also been used to evade the cap, according to traders.
However, the real goal of the sanctions was to fool the public that the West was doing something to punish Putin when in reality the imperative was to make sure Russia does not pull its oil from the western market and sends the price soaring.
A bigger challenge for the sanctions is the new logistics system that Russia and companies in its orbit began to build, consisting of tankers owned, insured and chartered outside the West.
As reported previously, sales of secondhand tankers have swollen the shadow fleet—industry parlance for tankers that shuttle petroleum from sanctioned nations. In the second quarter, five times as many tankers worked with sanctioned producers than at the end of 2021, according to ship-tracking firm Vortexa. Almost 80% of those ships have plied the Russian market.
The West derived leverage in part from the outsize role played by the shipping industry of Greece, which as an EU member observes the sanctions and price cap. The country’s tanker fleet moves more than half of crude exported from Russia, said Robin Brooks, chief economist at the Institute of International Finance. “The West has true pricing power,” he said, adding that the cap could be lowered to between $20 and $30 a barrel. Of course, at that price Russia would sell zero oil to the west and instead target just India and China, which in turn would lead to a violent explosion in Western oil prices, something the former Goldman FX trader clearly failed to anticipate (not that surprising when one looks at the track record of his FX trading recos during his Goldman tenure).
Meanwhile, as even the WSJ admits, what little leverage the West has is evaporating. The huge sums European tanker companies could earn from renting ships out to move Russian oil have fallen in recent months, suggesting Russia has growing access to tankers owned outside the G-7, said Henry Curra, head of research at shipbroker Braemar.
At Russia’s Asian port of Kozmino, where a flavor of crude called Espo has traded above the cap all along, few tankers insured or owned by companies in the West are now involved in the oil trade.
The Biden administration acknowledges that Russia is developing an independent fleet, but a senior Treasury official said it isn’t a significant driver of oil flows. The cost of creating that alternative export system diverts funds from the war, U.S. officials say. They estimate that Russia’s central bank has deployed $9 billion to replace Western reinsurance schemes.
U.S., European and Japanese insurers covered almost all of Russia’s seaborne exports before the war, including those on Moscow’s state-owned tankers. Known collectively as the International Group of P&I Clubs, these companies insure against claims from third parties, such as coastal industries affected by an oil spill.
By April, half of Russian crude shipments and a third of refined-product shipments were on tankers not insured by members of the International Group, according to Borys Dodonov of the Kyiv School of Economics.
Rolf Thore Roppestad, chief executive of Norwegian insurer Gard, said at least 10 tankers pass through the Danish straits, Suez Canal and Strait of Malacca daily without International Group insurance. That poses dangers, he said, because insurers outside the group mostly lack experience in responding to accidents.
“The concern is that these insurers may not have backing by reinsurers—or, to the extent they do, those reinsurers may not have the resources to meet a major claim,” said Alexander Brandt, a partner at law firm Reed Smith. If there is a spill, he said, “the fear is that there will be no one there to mop it up—literally.”
Kyiv is almost completely dependent on fuel imports to maintain its war effort…
Ukraine’s tanks are increasingly running on oil that comes from Russia in what German newspaper Handelsblatt describes as a paradox of war.
According to the Ukrainian customs authority, Kyiv is importing more and more diesel from Hungary and Turkey, both countries that process oil from Russia to a large extent in their refineries.
Although the market position of Hungary’s MOL Group and Turkish suppliers in Ukraine was already relatively good in the past, it was only recently that the Ukrainian customs authorities reported a striking increase in imports.
For example, MOL, which is closely linked to the Hungarian state, doubled its sales to Ukraine in the past six months.
Since MOL purchases Russian oil to a large extent, it is now likely to be the main fuel for Ukraine’s war machinery.
At the same time, companies that do not obtain their raw material from Russia are losing market share in Ukraine.
This is because MOL has a competitive advantage over other European oil companies: It has an exemption from the European Union to continue supplying its refineries with Russian crude oil.