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Russia faces future losses from the loss of the German and European natural gas and energy markets. Germany is pushing forward to free itself from Russian gas supplies, and supplies of other energy from Russia. This will be a market hard to replace for Russia. New renewable energy scientific and manufacturing advances could replace the dependence on coal, natural gas, oil leaving Russia without the earnings it makes now on energy supplies.

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In a major effort to halt increased missile attacks on Kviv and Ukraine by Russia DJT makes a decision to send Patriot anti missile systems to Ukraine financed by Germany. “It’ll be business for us, and we will send them Patriots, which they desperately need, because Putin really surprised a lot of people. He talks nice, and then he bombs everybody in the evening. There’s a little bit of a problem there, and I don’t like it.” In Congress Senators Graham and Blumenthal have 85 Senators behind a bill to support Ukraine and place penalties of upto 500% tariffs on countries that support Russia in its war effort by buying oil -including China, India and Brazil. Graham says- "China, India and Brazil buy oil and petroleum products and other goods from Russia—that’s the money Putin uses to prosecute the war.” Graham adds- "the U.S. had reached a turning point regarding Russia.” ...

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Former Russian finance minister, Alexei Kudrin, tells a news confrence at the St. Petersburg Economic Forum, that Russia should brace itself for an extended period when oil prices drop from $90 in June to $60. Russian finances are based on oil prices at $117 per barrel. He cautioned against the high military and social spending planned by the Putin administration.

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The Russian economy had GDP decline of 2% and was relatively not affected by the shutoff of imports of oil and gas from Europe in 2022. Gas exports to Europe began declining in the summer. The EU ban on seaborne oil from Russia and price cap went into effect in December 2022. Russia made a huge stimulus of 4% of GDP in 2022. The result is that only now in 2023 is the full impact being felt on the Russian economy.  WSJ reports that in January and February Russian exports of oil and gas revenue which makeup half of the budget fell by 46% year over year, while state spending jumped 50%. Analysts estimate that it would take a price of $100 for Russia to balance its books. Yet the Group of Seven price cap on Russian oil has brought it down to $50- the price the Ministry of Finance says Urals crude sold in February. This is a deep discount to the $80 price of Brent Crude, the US benchmark.  A bigger problem is the downward trajectory the Russian economy faces in future years. Worker shortages are severe for industry and a shift to wartime production does not add to productivity or productive capacity. The cut off from access to western technology and western financial markets will have a severe impact in the productive capacity for the economy, for oil and industrial production in the years to 2030. Russia needed to protect against the gradual shift away from fossil fuels to fight climate change by shifting the economy in a new direction using its access to western technologies not just China's technologies. Instead it now finds itself in a period of 1 year in 2022 when oil revenues surged with prices jumping from the war, and then a steady slump in all the inputs of development- supply of labor, capital and technology declining rapidly after 2023 as the costs of the Ukraine invasion are absorbed into the economy. As this report points out it is the social contract that similar to China's social contract of growth and improvement in standards of living that led to people having a large measure of confidence in the government. It was not fully grasped but it was the access to American and European Union plus Japanese technology, manufacturing, capital and markets that made this possible. With this absent the situation changes to put Russia, and China to a lesser extent as long as it trades with the west, on a different trajectory.  ...

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As India takes on the presidency of the G20 in December the first steps are being taken by the German Foreign Minister Annalena Baerbock to build closer ties with India. The Hindu gives this intervew with Baerbock that shows Germany's keen interest in building the India Germany partnership. This sets the stage for the bi-annual India Germany summit meeting, with German chancellor Scholz to visit India in early 2023. Some of Baerbock's comments show energy and enthusiasm for India to work closely with Europe. "Our countries have so much to offer one another. We want to tap that enormous potential. One such example is the concrete agreement we will sign during my visit, making it a lot easier for both Indians and Germans to study, research and work in our respective countries." "Today's era is not the era of war, that was Mr Modi's message to Putin- that was the resounding message and I highly appreciate India's seminal role in achieving this." ...

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Iran War and rescue of pilot of downed F15-E in mountainous terrain in southern Iran April 4 2026. CSAR or Search and Rescue Missions become a critical part of the war. The pilot was a colonel trained for the mission and spent 24 hours in mountainous terrain which was monitored by US forces, after intelligence located him in a mountain crevice. For this to be possible unlike in the Vietnam War and Korean War other nations are not involved as in the earlier Cold War.  The US under DJT as president has shifted to respecting Russia as a Northern European power that it can talk with (meetings with Putin in Alaska 2025) and China as a trade partner (planned meeting in Beijing in April 2026) that it can talk with unlike with previous administrations of Biden, Obama and Bush where China had afree hand in economic matters and global trade and Russia was shut out of the world economic system by elites who ran the government in the US at that time. Russia seeks reintegration in the world political and economic systems, and China seeks acceptance as an economic power which the US respects, both points in which the US has offered to accept. US has also repeated the line to China that it was not going to do the job of keeping Hormuz open for China and Japan to get 90% of oil imports, and in oding so risk losing its soldier's lives, while China and Japan can quietly watch doing nothing to help free navigation of international waters. Note that the narrowest strip of water of 13 miles separates Oman from Iran so that a part of these waters are on the Omani side and not on the Iranian side making free use of that Omani part under international law possible- in which sense Iranian hostile activity closing the Omani side also is a violation of free navigation. This is not pointed out by Iran or Japan or even Britain who are benefitting from US action and remaining silent or being ambivalent or accusing US of being interventionist even when everyone knows MAGA base rejected Bush in the Republican party and the elites and embraced DJT for great part because they want nothing to do with interventionist adventures in the Middle East for certain. US is getting a bum rap from European allies and from China, India, Japan and the media inside the US and in those countries as if the US seeks oil from the Middle East. It was Britain where a lot of the posturing goes on about non intervention that started this oil based intervention since 1900 in Iran itself, and in artificial states of Iraq, Syria, that it created out of the collapsed Ottoman Empire in World War 1. Sykes and Picot were the US and French diplomats who set that up. US under DJT has accomplished self sufficiency in oil and US has no need for anything from the Middle East, no desire to even get involved, and MAGA well grasps that fact and wants to keep it that way. Only nuclear weapons and ballistic missiles with long range to hit US and EU are reason for US action, which is reason enough for EU, China, Russia to set their own goals so that non proliferation in dangerous areas is prevented. So that the people of China, Russia, India, Europe and the rest of the world can enjoy the fruits of their own labors after a century of severe hardships and struggles which the American people if not their elites respect, and the fruits of peaceful cooperation which the American people extend to the World, and to China, Russia and India. ...

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Rugged hilly coast and shallow narrow straits - problems for Straits of Hormuz shipping is shown in the NYT following similar reports in WSJ. It will cost $200 billion for the munitions supplies and interceptors, and US naval operations, French naval operations to keep the Straits of Hormuz open, which is supported by US business as is seen in opinion in Editorial Board of WSJ on March 24, 2026. The Straits are a lifeline for Asia until renewable energy and alternative supplies of oil make the Straits history and a redundant proposition, which will be sooner than later after this episode, one too many more from the Middle East. More likely by 2030-2035. China and Japan depend on it for 90% of imports, and India 50% with alternative supplies provided for India from the US and Russia. Germany is only dependent on the Straits for 6% of its imports showing how far Germany has come and how important renewables and alternative sources of oil such as Venezuela will become in the time ahead, in a two pronged strategy that does not forget the challenges posed by climate from fires and floods. Were not stuck with the Straits- Japan and China can and will find alternative sources and increase production of renewable energy in the way Germany has done to get to 6% of imports from that region. ...

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The reckless behaviour of German elites in pursuing increased dependence on Russian oil and gas and ignoring American warnings is shown in this report in The Guardian. The first links to Russian oil and gas were started under chancellor Brandt in 1970. At that time the dependency on oil and gas supplies was much less than 10%. Dependence increased during the Schroeder and Merkel years to the extremes that exist today. Not much more even in the year of the fall of the Berlin Wall in 1989. It was the misconception of chancellor Schmidt of the SPD in his differences of opinion with presidents Carter and Reagan on the risks of increasing dependence on Russian energy that marked this period. Schmidt believed Germany was right in its conviction that increased trade would bring peaceful cooperation without realizing that economic dependency is never a good thing. Poland had a skeptical view- German elites including business elites were being corrupted. Cheap Russian energy was being used in the Schroeder and Merkel years as a competitive business advantage without considering the risks involved and the admonitions of American presidents of the dangers. With Steinmeier of the SPD there was the immense guilt of the millions of war dead from the German invasion of Russia in 1941 that acted as a brake on evaluating the increasing dependency for energy that reached over 35% by the time he was foreign minister. The fall of the Berlin Wall was seen not as a result of multiple factors including the positions taken by Carter and Reagan, the losses to the Russian economy from the war in Afghanistan, and the general decline of the Russian economy. German leaders saw this as coming from the new relationship being built with Russia. German business and Schroeder- Merkel even allowed not just new Nordstream pipelines under the Baltic Sea but also transferred ownership of reserves, the gas and oil storage inside Germany to Russia's Gazprom. German Economy minister Habeck says the storage tanks were emptied so that there would be added surge for oil and gas prices after the attacks on Ukraine. This Guardian report ends by saying that Mr. Steinmeier still needs to show why he pursued policy of cooperation with Russia with increasing dependency to the point that a cut off of Russian oil and gas supplies would lead to gas rationing in Germany in the event of a sudden cutoff. Was it a form of sensible cooperation taking dependency to such extremes. Similar questions remain for chancellor Merkel. With the added question for Merkel about the increase in trading ties with China even after the Trump administration had warned of the serious risks to US and European competitive advantage in technology and manufacturing, and the increased dependence on a supply chain that was fundamentally weak as shown clearly by the pandemic.     ...

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Russian oil production at 10 million barrels a day esentially remained flat this year and there are no new supplies coming in from the areas outside of OPEC. The wells in western Siberia are aging and like Prudhoe Bay in Alaska this is leading to declining production. Most of the increase in production was in the project in Sakhalin, in which Exxon is working with Russian oil companies. Russia has announced a $4.2 billion tax cut for the oil sector. Large investments will be needed for Russia to continue to produce 10 million barrels a day.Some of the investments would go into Eastern Siberia which is also a more difficult terrain to drill in. Demand within Russia is growing rapidly leaving less available for export. Right now Brazil is the only bright spot in new supplies with new offshore finds in deepwater areas where Brazil has a lot of experience drilling.

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India depends on oil imports for 85% of its needs. $110 a barrel oil imposes severe hardship in a country with a population of 1.2 billion people. Russian oil is offered at a $20-$25 discount says this report in DW.com. Higher oil prices are already making a recovery from the pandemic more difficult in India.

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Sanae Takaichi press conference with DJT at White House March 19 2026- there is no mention of Japanese help with clearing Straits of Hormuz. US Japan relations after the meeting of Takaichi and DJT at the White House appear to be in good shape. Japan will invest $73 billion in US investment projects in 2026 as part of the $550 billion commitment made at the time of the US Japan trade deal in 2025 under the previous LDP prime minister. Takaichi is coming with strong support in Japan after winning a landslide victory in the general election. Japan's main concern is the belligerent North Korea and China's posture in Asia as it relates to Taiwan. Agreements were reached on critical issues- to develop alternative supplies of critical minerals, to rebuild the shipbuilding industry which US and Japan had given up after dominating it for most of the 20th century. This is critical to ensure open navigation on the oceans of the world. Agreements on high tech and AI, and agreement to purchase Alaskan oil to cut Japan's 90% dependence on volatile Middle East supplies. Japan has managed Middle East supply by keeping over 254 days of inventory but this looks to be very risky as Germany learned from its dependence on Russian oil which went in the wrong direction under Merkel. Japan has released about 18% of its total reserve amount of the 254 days inventory (146 days in national reserves and 101 days in private mandated reserves). It uses 3.14 million barrels a day in 2026 down from 5.8 million barrels a day in 1996, using about half today through conservation and using renewable energy showing the potential for the US and Europe. Germany has cut oil consumption by a third in comparison from 2.9 mbd in 1996 to 2.0 in 2026. And the US remains stagnant with oil demand highest in 2005 at 20.5 mbd and 20 years later at 20.5 mbd mainly because 14mbd or 70% goes to cars and trucks on the road for 347 million people over continental spaces (compared to 297 million in 2005) for a reduction of oil use of 15%. ...

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Exxon CEO Tillerson established the early links with Russia for oil exploration projects. He says large investments in oil exploration in Russia are unlikely to be affected by the political risks in U.S.-Russia relations.

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US president DJT outspoken in "The Conversation," with Dasha Burns in The Politico magazine about dangers of "civilizational erasure" for the Europe that people knew in the past as its population changes with uncontrolled migration of the past two decades. DJT comments on a wide range of topics centering on the migration that has changed the life and politics of Europe by 2025 and what the future holds for Europe if it does not preserve it's own identity handed down for generations. Dasha Burns starts with Ukraine- the reports say DJT said this or that about Ukraine but look at the question she put to DJT- Which country is in the stronger negotiating position? Most people know the answer in the winter of 2025 is that Russia is in a much much stronger position in 2025 and a big part of this is it's size 40 million people in Ukraine to 120 million in Russia and oil revenues. Then Burns asks if it is Zelensky who is responsible for the stalled progress what's going on here, all the time giving DJT something that he might take up that would make a headline grabbing interview. She prompts DJT with the starter phrases and pausing for DJT to pick up on it- If Zelensky rejects this deal, do you think Ukraine has lost this war, and the consensus in Europe is to keep supporting Ukraine until they can win this war. And DJT does no more than what he has said many many times about the difficult situation Ukraine is in. Asked if the US may walk away from supporting Ukraine as Trump Jr. has said, and DJT says- "No it isn't correct. But it's not exactly wrong" because they have to play ball. And that is exactly what the European states UK, France, Germany, Italy, have done as they keep talking and modify the original plan devised by Russia and the US. What this says is that the European states are not trying to win this war and at the same time not willing to let this war be lost and the principle of invading another country be seen as acceptable. This is where there are limits to DJT's diplomacy as he attributes the problem to the hatred between the leaders of the two countries. DJT does not say Zelensky would lose the election if one were held in 2026 as he calls for elections.   ...

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The meeting of G7 leaders and of leaders from India, Indonesia and Argentina, South Africa, ended with a sense that economic sanctions the preferred tool against the Russian invasion are not working after 3 months. Discussions with India, Indonesia and other poor countries show the need for the developing countries for access to their large populations of oil at reduced prices from the recent skyrocketing prices. With oil and energy purchases made by China and India and other poor countries for reasons of price discounts from $125 per barrel oil, Russia is able to sell oil in other markets making up in price for the drop in volume. 

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This report in the WSJ says the increase in Saudi production announced on June 2 will do more for Saudi Arabia diplomatically as it improves relations with the Bdien administration, and much less for oil markets. The increase of 648,000 barrels a day for both July and August is seen as a drop in the bucket. Only Saudis and UAE have spare capacity- estimated to be at 3 million barrels a day of spare capacity. The Russian oil production has already dropped by 1 million barrels a day since the start of the war in Ukraine and will drop further after the European Union oil embargo on 90% of oil supplied by Russia to the EU. Russia may even withhold supplies from the market to keep oil prices high as it is selling oil at a large discount. Russia evades western oil sanctions by selling oil using transfers out at sea and in other ways that do not reveal the source of the oil. Saudis and UAE are seeking better relations with the US to gain security guarantees after drone and other attacks by Yemeni rebels and Iran. Earlier president Biden had distanced himself from Saudi Arabia following human rights situations that led to deteriorating relations. The EU oil embargo, high oil prices that are hurting poorer countries all over the world, and the commitments by the US and other European partners to reduce fossil oil fuels production and increase renewable energy production are now added factors that the US is including in its relations with the Middle East as it seeks to balance different factors. Saudis see an opening for improved relations.   ...

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The $17 discount for Russian oil to Brent crude is a result of the president's efforts with sanctions plus tariffs on China and India to cut oil purchases from Russia. This puts a strain on Russia in financing the war with Ukraine. Bothe China and India have cut purchases of Russian oil in recent weeks and the Indian refinery at Jamnagar no longer gets Russian oil, according to recent reports. DJT was criticized for his stance on Indian tariffs as inconsistent with the agreement with China on rare earths. It now appears that China and India have both agreed to stop financing the Russian war effort with big oil purchases and are shifting it to other places such as Brazil, Guyana and Canada. India plans large oil purchases and arms purchases from the US and this is part of the trade agreement being negotiated with India. About one third of the additional 240 million barrels of oil on the seas in tankers is Russian oil being stored for lack of buyers with total oil on waters at 1.4 billion barrels. This has led to a 48% increase in tanker costs to $125,000 a day. All this makes it harder for the Russian economy to sustain the war effort as the US pushes both sides to settle the Ukraine conflict in the 28 Points Peace Plan negotiated with important Russian negotiators in Washington DC over 3 days last week. ...

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Achievements of Elvira Nabiullina as central bank chief in Russia since 2013 are the reducing of US dollar reserves from 40% to 11%of $600 billion in Russian reserves shifting to hold most of its reserves in euros, gold or renminbi Chinese currency. She also implemented the alternative to SWIFT the global bank messaging system, and changed the payments infrastructure to process credit card transactions in the country so departure of Visa and Mastercard had minimal effect.

In this way this highly respected banker has protected Russia's economy from western sanctions, says NYT. She is trusted by president Putin and was adviser to Putin in 2012, minister of economic development before that when Putin was prime minister. When Russia suffered an economic crisis in 2014 as oil prices fell sharply and Saudis increased oil production, the ruble fell. Nabiullina increased rates to 17%, and the economy shrank till it stabilized with inflation down to 4% by 2017.

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Elvira Nabiullina, head of Russia's central bank, is a think tank economist who was Economy minister before becoming chief economic advisor to Russian president Putin in 2012. She is one of the liberal economists in Russia who see the years of economic growth following ruble devaluation in 1998 as an example of how devaluation can actually help the economy. The devaluation lowers costs for manufacturing and agriculture, and is seen by some economists as having done more than oil price increases to help the Russian economy grow during president Putin's first term from 1999 to 2004. Nabiullina's position to support a free float after the sharp decline in the value of the ruble following the plunge in oil prices, is based on the need she sees to use the crisis to reduce Russian overdependence on imports. This policy had other advantages by reducing the need to tap Russia's foreign currency reserves to defend the ruble. Russia's gold and foreign currency reserves are at $385 billion. In Jan 2015 the central bank cut interest rates. A policy of increasing rates would trigger a sharper recesssion. Russia faces a unique situation in that the oil price decline and the decline in the value of the ruble occurred at about the same time of about 50%, so that the budget continues to be balanced. The number of rubles coming in from oil exports remains the same after the crisis. Nabiullina told Russia 24 television- "We have to live in a different zone, Russians should orient ourselves more toward our own sources of financing projects, and to give a chance to import substitution."...

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How Gazprom and Shell are changing their partnership to develop Sakhalin II: 1. The vanguard in Russian oil projects is Sakhalin II. In 2005 Shell announced the price tag would double to $20 billion. With forbidding terrain and climate and spread over a vast region in Russia's Far East, this is a really big challenge. Who owns what part of this project- Shell has 55% of the partnership in Sakhalin Energy Investment Company, a stake it picked up from Marathon which exited in 2000. Mitsui and Mitsubishi are other partners. Note the arrangement in the original contract which was signed in 1994. Under the 1994 production sharing contract with Shell Russia does not make much money till Sakhalin Energy recovers its costs. Upto that time Sakhalin Energy would pay 6% royalty on revenues. Following this Sakhalin Energy would get 90% of the profits until the project earned a 17.5% return. Taxes are 32%. Because of this arrangement the cost overruns at Sakhalin present a serious problem for the Russian government, as the returns for Russia depend on Sakhalin Energy first recovering the costs. In 2005 Shell agreed to swap 25% of its controlling stake in Sakhalin Energy with Gazprom for 50% of a field in western Siberia. 2. Shell is adapting its strategy in the changing oil picture. Comments by Malcolm Brinded, Shell's executive director for Exploration and Production indicate strategy in the changing global oil picture. Shell sees the importance of engaging with a Russian partner for the long run to make long-term gains with a first-mover advantage. For Shell the real returns would come from other players using Shell's expensive LNG plants and terminals. ...

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OPEC and Russian oil producers are planning to increase oil production by 400,000 barrels a day for each month through 2022. Demand is increasing with economic recovery and this will lead to higher oil prices. Oil prices are now $80 a barrel in October 2021. Shortages of natural gas and high prices are leading power generation companies to use oil in place of natural gas. This will increase demand for oil by 500,000 barrels a day. Oil export revenue was cut in half to $119 billion for Saudi Arabia in 2020 and Saudis want to see higher prices to make up for lost revenue. OPEC + that includes Russia decided to end a price war during the Trump administration and this time have designed a strategy that will gradually push up prices. In recent years shale oil producers in the US quickly responded to higher prices of oil and increased production. After the pandemic in March 2020 American shale oil producers in 2021 are not increasing production. This gives OPEC+ better ability to set oil prices at higher levels. ...