Energy Front

Russia and China Veto UN Resolution to Reopen the Strait of Hormuz

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Russia and China have blocked a UN Security Council resolution calling for the guaranteed freedom of navigation through the Strait of Hormuz. As reported by Associated Press, despite several rounds of revisions to soften the text, both nations exercised their veto power. The vote took place just hours before the expiration of an ultimatum set by U.S. President Donald Trump, demanding that Tehran reopen the strategic waterway by 8:00 PM ET. Key details of the vote: Analytical Summary: The veto by Russia and China strips Washington of the ability to rely on international law for its strikes against Iran, turning the impending operation into a “private war” for the Trump administration. Geopolitical Calculus: For China, a closed strait is an economic disaster, but recognizing the U.S. right to “enforce order” through force is considered a greater long-term risk. For Russia, the current chaos is financially beneficial due to record Urals oil prices ($116). By supporting Iran at the UN, both nations solidify their status as alternative centers of power capable of paralyzing White House initiatives on the global stage. The Trump Trap: Donald Trump now finds himself in a position where fulfilling his ultimatum will appear as a unilateral violation of international order, unsupported by the Security Council. This jeopardizes U.S. relations with European allies, who remain traditionally sensitive to the legitimacy of military operations. The Iranian Gambit: Tehran, backed by two nuclear powers at the UN, is unlikely to yield before the deadline. The veto has convinced the leadership that they are not isolated. The world now stands on the brink of a massive strike on Iranian infrastructure, which could lead to an unpredictable surge in energy prices and a new cycle of global confrontation.

“No Shipments Until Late April”: Lukoil’s Largest Refinery Shuts Down After Drone Attack

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The Norsk (Nizhny Novgorod) refinery, operated by Lukoil, has suspended oil processing following a drone attack on April 5, according to Reuters. As Russia’s fourth-largest refinery and a critical supplier to the Moscow region, the facility has ceased receiving raw materials and has withdrawn gasoline, diesel, and fuel oil from the St. Petersburg International Mercantile Exchange (SPIMEX). Impact and Scale of the Shutdown: Analytical Summary: The paralysis of the Nizhny Novgorod refinery, occurring alongside the shutdown of Kinef and the Saratov plant, signifies that attacks on Russian oil refining have transitioned from “harassing strikes” to a systemic fuel crisis. A Blow to the “Heart” of Consumption: Unlike export-oriented plants, Norsk serves the domestic market. The loss of 5 million tons of gasoline capacity annually, while the largest refineries in the Leningrad and Saratov regions are already offline, creates a “perfect storm.” The government may be forced to tap into strategic reserves or rapidly increase fuel imports from Belarus. Technological Bottleneck: A shutdown “until late April” is an optimistic estimate. If critical components like catalytic reforming units or primary distillation towers (ELOU-AVT) are damaged, repairs under Western equipment sanctions could take months. The simultaneous failure of three giants suggests that air defenses are struggling to protect infrastructure even deep within the country. Economic Irony: While Russia’s crude oil exports are trading at record highs of $116 due to the Hormuz crisis, a paradoxical domestic situation is emerging: a surplus of raw crude coupled with an acute shortage of finished gasoline. This deprives the economy of value-added revenue and hits the agricultural sector during the critical spring sowing season.

Russian Oil Prices Surge to $116 per Barrel for the First Time in Over 13 Years

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The price of Russian oil continues its rapid ascent due to the blockade of the Strait of Hormuz, which previously handled about a quarter of global oil supplies. According to Bloomberg, citing Argus data, the cost of a barrel of Urals grade in Russia’s Baltic ports reached $116.05 at the end of last week—the highest level in at least 13 years. This represents a staggering 230% increase since late December, when Urals traded below $40 due to U.S. sanctions and buyer hesitation. Key indicators of the price rally: Analytical Summary: The surge of Urals to $116 is a classic “Black Swan” event that has effectively neutralized the impact of Western sanctions and price caps in record time. The Irony of Scarcity: Sanctions against Rosneft and Lukoil were effective only as long as the market was saturated. As soon as the Strait of Hormuz was blocked, India and China discarded sanction concerns. Russian oil is no longer seen as a “liability” but as a “lifeline” for Asian refineries, allowing Moscow to dictate terms and set a premium over the Brent benchmark. Resource Resilience of the RF: A monthly inflow of 1 trillion rubles in surplus revenue provides the Kremlin with a massive safety margin. these funds not only cover the budget deficit but also allow for the continued financing of military expenditures without resorting to austerity measures. Effectively, the conflict in the Middle East has become the primary financial donor to the Russian economy in 2026. The End of the “Price Cap”: This situation demonstrates the impotence of G7 administrative restrictions in the face of a global physical commodity deficit. When there is no alternative, market mechanisms break through any political barriers. For the West, this creates a difficult dilemma: maintain pressure on Russia and risk global energy collapse, or watch silently as Moscow accumulates record wealth.

Kazakhstan Excludes Russia from Power Plant Construction Projects

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Kazakhstan has declined the services of Russian companies for the construction of Thermal Power Plants (TPPs) in Semey, Kokshetau, and Ust-Kamenogorsk. At a government meeting, it was revealed that Kazakhstan decided to build the Kokshetau TPP independently, while the other two will be constructed by a Kazakh-Singaporean consortium involving Samruk-Energy. This decision marks a significant shift away from the preliminary agreements reached with Russia in late 2023. Key details of the policy shift: Analytical Summary: Kazakhstan’s withdrawal from the energy deal with Russia is a clear example of how high interest rates and sanction pressure on Russian banks are stripping Moscow of its status as an “infrastructure exporter.” The Collapse of Financial Diplomacy: The Kremlin’s traditional influence model—”we build, our banks provide the credit”—is no longer functional. Under current market conditions in the Russian Federation, providing preferential financing for long-term foreign projects has become an unaffordable luxury for Moscow. Astana has pragmatically chosen Singaporean investments, which are unburdened by sanction risks and offer a more transparent structure. Technological Independence: Replacing Inter RAO with domestic capabilities and Asian partners suggests that Kazakhstan no longer views Russian energy technology as indispensable. Utilizing Singaporean experience likely indicates a transition to more modern environmental and digital standards for TPP management, which is critical for the modernization of the country’s aging energy grid. Geopolitical Drift: The public rejection of agreements reached at the presidential level highlights the growing distance between Astana and Moscow. Kazakhstan continues its multi-vector policy, demonstrating that being an “EAEU ally” does not grant Russia an automatic right to major infrastructure contracts if they are not backed by real, competitive financing.

Traffic in the Strait of Hormuz Reaches Record Levels Since the Start of the U.S.-Israeli War Against Iran

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Over the past weekend, April 4 and 5, 2026, 21 vessels passed through the Strait of Hormuz—the highest two-day figure since early March, when movement in this strategic artery nearly halted due to the military operation launched by the U.S. and Israel against Iran. According to Bloomberg, the resumption of traffic was made possible by active negotiations between Tehran and governments facing acute energy shortages. The agency emphasizes that the very fact of these negotiations strengthens Iran’s grip over the strait. Key details of the current situation: Analytical Summary: The surge in traffic in the Strait of Hormuz demonstrates a new reality where global energy security depends on the ability of individual nations to negotiate with Iran, bypassing U.S. sanctions. Legitimization Through Blockade: Iran is using the strait as a “diplomatic exchange.” By agreeing to let tankers pass to India or other nations, Tehran is fracturing the unity of the anti-Iranian coalition. Countries desperate for energy are forced to recognize Iran’s agency in the strait, undermining U.S. efforts to achieve total isolation of the regime. Survival Economics vs. Military Might: Even under massive strikes from Israel and the U.S., Iran retains the capability to physically block or permit vessel transit. This renders the allies’ military operation less effective: while infrastructure can be destroyed, ensuring the safety of civilian shipping without Tehran’s consent remains nearly impossible. Fragile Balance for India and Asia: The fact that the primary beneficiaries of this “thaw” are LNG carriers for India indicates Iran’s attempt to maintain the loyalty of key Asian players. For New Delhi and Beijing, the Strait of Hormuz remains an indispensable route, and their willingness to negotiate with Tehran creates a significant geopolitical dilemma for the United States.

Russia’s Second Largest Refinery Halts Operations Following Drone Strike

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The Kirishinefteorgsintez (KINEF) refinery in the Leningrad region, one of the pillars of Russian oil processing, has ceased operations following a night-time drone attack on March 26. According to Reuters, the strikes disabled key units of the enterprise, leading to a complete shutdown of the production cycle. Scale of Damage and Consequences: Analytical Summary: The shutdown of KINEF is not just a local accident; it is a heavy blow to Russia’s energy security and export potential. Vulnerability of Giants: The fact that the country’s second-largest refinery has been disabled for the third time demonstrates the inability of air defense systems to provide reliable cover for critical infrastructure deep in the rear. The simultaneous hit on two units (AVT-4 and AVT-6) indicates high strike precision and an intent to completely paralyze the facility. Fuel Shortages and Prices: The loss of 7% of national refining capacity will inevitably trigger fuel shortages on the domestic market. The situation with diesel is particularly critical, as KINEF is one of its largest producers. This will lead to a new round of price hikes at gas stations and create problems for logistics and the spring sowing campaign. Technological Deadlock: The timeline for restoring AVT units remains uncertain. Under sanctions, replacing high-tech equipment and automation becomes an extremely difficult quest. Every week of downtime for KINEF means millions of tons of lost petroleum products and billions of rubles in losses for Surgutneftegaz and the state budget. The geography of the strikes (from Saratov to the Leningrad region) shows that safe zones for the Russian oil industry no longer exist.

Ukrainian Drones Strike One of Russia’s Largest Black Sea Oil Terminals for the Second Time This Spring

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On the night of April 6, 2026, Ukrainian drones launched a massive attack on the city of Novorossiysk in the Krasnodar Krai, according to Regional Governor Veniamin Kondratyev. The primary target was the Sheskharis oil terminal, one of the most strategically significant oil transshipment complexes in southern Russia. Kondratyev confirmed damage to several enterprises and reported eight injuries, including two children. This facility is a critical hub for Russia’s export infrastructure and, according to the Ukrainian General Staff, is actively used to supply Russian military groupings. Key details of the attack and its significance: Analytical Summary: The strikes on Sheskharis signal the beginning of an effective economic blockade of Russian Black Sea ports using a “mosquito fleet” of long-range drones. Vulnerability of the “Southern Gate”: Novorossiysk has remained Russia’s primary export hub as Baltic ports face increasing logistical hurdles. Systematic hits on the Sheskharis terminal make ship insurance in this region prohibitively expensive and the risk for tankers critical. This is a direct blow to the Russian budget, which remains heavily dependent on maritime raw material exports. Air Defense Dilemma: The fact that drones have penetrated the multi-layered defenses of such a vital port twice in a single month suggests a deficit in air defense systems in the southern theater. The priority given to protecting Moscow and the Crimean Bridge leaves industrial giants in the Krasnodar Krai only partially covered. Military Logistics Under Threat: Novorossiysk is increasingly replacing Sevastopol as the primary logistics base. Disabling the terminals and berths of Chernomortransneft strikes not only at the treasury but also at the fleet’s ability to receive fuel promptly. If these attacks become weekly, port operations could be paralyzed without a formal declaration of a naval blockade.

Sweden Seizes Third Russian Shadow Fleet Vessel in a Month

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The Swedish Coast Guard has detained the oil tanker Flora 1 off the country’s southern coast, marking the third seizure of a vessel linked to Russia’s “shadow fleet” in just 30 days. According to MarineTraffic, the tanker was traveling from the Russian port of Primorsk to an unknown destination. Swedish authorities suspect the vessel caused an oil spill 12 kilometers off the island of Gotland. Escalation in the Baltic: Analytical Summary: The detention of the Flora 1 signifies a shift in Western strategy: using environmental regulations as a primary tool to dismantle the shadow fleet. Ecology as a Legal Lever: Proving a violation of the “price cap” on the high seas is legally complex. However, an oil spill or inadequate insurance provides a direct legal basis for seizing vessels in territorial waters. Sweden’s Minister for Civil Defence, Carl-Oskar Bohlin, has explicitly labeled these aging, uninsured tankers as “serious threats to security and the environment.” The Baltic as a “NATO Lake”: Following Sweden’s accession to NATO, the monitoring of Baltic straits has reached a new level of intensity. Stockholm’s willingness to use boarding teams (as seen with the Sea Owl) makes the logistics through Primorsk and Ust-Luga increasingly hazardous. For the Kremlin, the shadow fleet—once a multi-billion dollar “untouchable” asset—is becoming a liability as each seizure exposes ownership chains and insurance loopholes.

Non-Commodity Exports Drop by $30 Billion Following Putin’s Claims That Russia Is “No Longer a Gas Station”

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Russia’s non-commodity non-energy exports (NCNE) totaled $163.6 billion in 2025, according to Roman Chekushov, Deputy Minister of Industry and Trade. While the ministry highlights an 11% increase compared to the disastrous 2024, the figures reveal that Russia’s push for economic diversification remains a facade. The Reality Behind the Numbers: Analytical Summary: The growth in non-commodity exports in 2025 is merely a “low base effect” following the catastrophic slump of 2024, when volumes hit a seven-year low. A Gas Station with Empty Tanks: The Kremlin attempts to frame the slight decrease in oil’s share of exports as a success for diversification. In reality, this is a consequence of heavy sanction discounts and a deteriorating global market. Russia isn’t selling more advanced machinery; it is simply receiving less revenue per barrel of oil. Low-Value Exports: Even within the non-commodity category, growth is driven by raw materials with minimal processing—fertilizers, metals, and agricultural products. The high-tech sector continues to degrade as sanctions block access to essential Western components and markets. The Illusion of Global Demand: While the Ministry of Industry and Trade claims Russian products are “in demand,” it ignores the fact that exports to “friendly” nations often come with massive discounts and logistical costs that erase profits. Ultimately, the Russian economy remains a hostage to the commodity model, now with a crippled technological core.

Rosneft Reports 75% Profit Collapse as “Perfect Storm” Hits Russian Oil Giant

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Rosneft, Russia’s largest oil producer, faced a nearly fourfold drop in net profit by the end of 2025. According to IFRS reporting, the company earned 293 billion rubles, compared to 1.084 trillion the previous year. In the fourth quarter alone, profits plummeted tenfold. Key Financial Indicators of the Decline: Analytical Summary: Rosneft’s report is a diagnosis of the entire Russian commodity model under isolation and prolonged war. Sechin vs. Central Bank: CEO Igor Sechin’s public complaints about the “high key interest rate” expose a rift between the state industrial sector and financial regulators. Rosneft’s massive debt load, combined with expensive credit, is effectively “eating” all operating profits. The company can no longer simultaneously serve its own appetites and the state’s strategic goals. End of Superprofits: The fourfold profit drop translates into a sharp reduction in dividends and tax contributions. This creates a massive hole in the 2026 budget, which the Kremlin will have to fill either through the printing press or by further increasing taxes on the population and businesses. Without Western technology, the “Vostok Oil” project is becoming a financial liability rather than a driver of growth.