Russia/Ukraine War Update - June 7th, 2022

 *** MILITARY SITUATION ***

 

-A second Russian general is reportedly dead after heavy fighting in Ukraine’s eastern Donbas region over the weekend. Lt. Gen. Roman Berdnikov, formerly the commander of Russian troops in Syria, is believed to have died Sunday, possibly in the same battle that killed Russian Maj. Gen. Roman Kutuzov, Russian-language Telegram channel Volya Media reported. The generals were in an armored column that was ambushed by Ukrainian forces, possibly on a bridge somewhere in the Donbas, according to the report. The exact details of the exchange are not yet known.

-The Ukrainian navy said it has pushed back a fleet of Russian warships more than 100km from its Black Sea coast. The group of Russian vessels were “forced to change tactics” after carrying out a naval blockade on Ukraine’s coast for weeks, the navy command of Ukraine’s armed forces said on Facebook. It has not been possible to independently verify this information.

*** ECONOMIC & POLITICAL ***

-Gasoline and diesel prices are hitting record-painful new highs every single day, and there doesn’t seem to be a true end in sight. But our leaders, for lack of a better word, are trying to fix that. According to CNN, in response to the extremely high prices, President Joe Biden may release some of the country’s oil reserves to be used in cars and trucks, which could boost supply. t’s not as simple as just turning on the taps to allow more diesel to come out, however. The United States doesn’t stockpile refined gasoline and diesel like it does with crude oil. The reason is, that gas and diesel do not last very long in that refined state, and would likely expire much sooner than they could be used. Instead, the oil that could be made available is from the Northeast Home Heating Oil Reserve, which is obviously used to heat homes, and not usually used to power vehicles. The federal government has kept a stockpile of home heating oil since 2000, primarily in Connecticut and Massachusetts.

-The North Atlantic Treaty Organization announced it will launch military drills with 7,000 troops in the Baltics. The provocative war games will include Sweden and Finland. Stockholm is hosting the exercises after applying for NATO membership last month. The war games, dubbed Baltic Operations (BALTOPS 22), are based in Stockholm. BALTOPS 22 will primarily consist of naval operations and run from June 5-17. The drills will involve 45 ships and 75 aircraft. Sixteen nations will participate, including Belgium, Bulgaria, Denmark, Estonia, Finland, France, Germany, Latvia, Lithuania, the Netherlands, Norway, Poland, Sweden, Turkey, the United Kingdom, and the United States. The annual war games are taking on increased significance as Helsinki and Stockholm recently submitted their applications to join NATO. The USS Kearsarge is in the Swedish capital city for the war games. According to Chairman of the Joint Chief, Gen. Mark Milley said, part of the ship’s mission is a show of force to Russia. Swedish Prime Minister Magdalena Andersson added, "This shows President Biden’s security assurances are followed by actions."

-Russia says it will not react to Finland and Sweden joining the North Atlantic alliance but warned against a military buildup in the Nordic counties.

-Morale among US President Joe Biden and his White House staffers is plummeting as the administration seems unable to solve an onslaught of challenges that have gripped the country, according to an article in Politico. The outlet claims to have spoken to five White house officials and Democrats “close to the administration not authorized to publicly discuss internal conversations,” who say that internal tensions in the White House have grown as aides engage in “finger-pointing” and panic over staff shakeups.

-Western deliveries of certain missile systems to Ukraine could lead to Moscow widening its military operation, in the country, as a defensive measure, Russia’s Foreign Minister, Sergey Lavrov, said on Monday. “The longer the range of the missiles being delivered to the Kiev regime, the further we will push the Nazis away from the line from which there is a threat to the Russian population of Ukraine and Russia,” Lavrov said during a press conference. The diplomat added that Ukrainian President Volodymyr Zelensky’s promises not to use American rockets to strike Russian territory are “babble” that cannot be taken seriously, noting that even politicians and lawmakers in Ukraine are “simply laughing at the Americans who said that they believe Zelensky.” Last week the US announced it would supply Kiev with M142 HIMARS rocket systems, but only on the condition that they would not be used to strike Russian territory. Zelensky publicly accepted those terms, however several Ukrainian politicians, as well as the newly appointed US ambassador to Kiev, later contradicted the president’s pledge, stating that Ukrainian soldiers were free to choose their targets, including those in Crimea.

-Germany has been hesitant in sending tanks to Ukraine to counter Russian forces, due to “historical reasons,” government sources have told Der Spiegel magazine. According to the unnamed officials, there is concern within Chancellor Olaf Scholz’s government that Kiev could become over-confident if it achieves a series of victories, and might launch an incursion into Russian territory. Such a development “would mean that German tanks would once again be inside Russia,” Der Spiegel wrote on Friday, in an apparent reference to Nazi Germany’s invasion of the Soviet Union in 1941

-Citi and Barclays, just capitulated on their downbeat forecasts - having seen crude steamroll any and every downside catalyst thrown at it and hitting 3 month highs - and were forced to hike their price targets. Of course, their views don't matter since anyone who had traded based on their reco to short oil is now looking for a new career; but with them out of the way, the big boys are now coming out with a new round of aggressive price hikes. To wit, late on Monday, Goldman published a report in which it again revised its price outlook (higher), saying that structural shortages remain unresolved to this day (despite a brief period in which the oil market enjoyed its first surplus since June 2020), and the bank is raising its peak summer oil price target from $125 to $140, while also hiking it oil prices targets for the rest of 2022 and 2022 by $10 higher than before.

-The most enduring US ally in the Syrian War, the Kurdish Syrian Democratic Forces (SDF) are very publicly interested in resisting the latest round of planned Turkish invasions of northern Syria, saying they are open to coordination with the Syrian government’s troops to do so. Turkey has repeatedly invaded northern Syria and northern Iraq to have a run at Kurdish factions, declaring them "terrorists" in both. The operations in Syria aim at the SDF’s parent organization, the YPG. The most recent threatened Turkish operation seeks to establish a 30 km "security zone" within Syria. This is roughly in line with past plans threatened, mostly with an eye toward propping up Turkish-backed rebels in the area. Syria opposes such raids because that "zone" becomes rebel territory, and the SDF oppose it because it’s carved out of their territory. SDF leaders suggest the Syrians would particularly help if they used air defenses against the Turkish warplanes. The US-armed SDF are a formidable on the ground force, but were an auxiliary of the US in fighting ISIS, and envision the same role with Syria in resisting Turkey. Turkey backed the rebels in Syria almost immediately at the beginning, envisioning the Sunni Arab-dominated rebels being more hostile to Kurdish autonomy, and leaving the YPG in a weakened position.

-Ukraine needs 60 multiple rocket launchers – many more than the handful promised so far by the UK and US – to have a chance of defeating Russia, according to an aide to the country’s presidency. Oleksiy Arestovych, a military adviser to the president’s chief of staff, told the Guardian that while he believed the rocket launchers were “a gamechanger weapon”, not enough had been committed to turn the tide in the war.

-A broke and extremely cash-strapped Sri Lanka has turned to Russia for cheap oil, as much of the western world shuns Moscow over its invasion of Ukraine while savvy eastern nations such as India and China take advantage of a bifurcated oil market to buy as much crude as they can at a price that is roughly $30 below spot. Trapped in the worst economic crisis in its history, the South Asian country said last weekend that it would pay $72 million for 90,000 tons of Russian crude ordered via a Dubai-based company and docked at Colombo for weeks, the Nikkei reported. Sri Lanka's first purchase of Russian oil since the outbreak of the war in Europe gave a new lease of life to a refinery in Sapugaskanda, just outside the commercial capital, which had been shut since March.

-Saudi Arabia raised oil prices for its biggest market of Asia by more than expected as the region’s main economies ease coronavirus restrictions, helping boost demand. The increase for July shipments resumes a streak of hikes that started in February and was only broken when state producer Saudi Aramco cut prices from record levels a month ago. Aramco raised its key Arab Light crude grade for Asian customers by $2.10 a barrel from June to $6.50 above the benchmark it uses. The market was expecting a boost of $1.50, according to a Bloomberg survey of refiners and traders.

-Ukraine’s foreign minister, Dmytro Kuleba, has urged countries not to trust Vladimir Putin’s promises not to use trade routes to attack the southern port city of Odesa. Putin has said Ukraine could use the ports of Mykolayiv and Odesa for food exports, and that Russia would not use the mine clearance situation to launch “some attacks from the sea”. Kuleba said Putin’s words were “empty”.

-A peacekeeping mission of the Collective Security Treaty Organization (CSTO) could eventually be deployed in the “liberated” regions of Ukraine, the head of Russia’s State Duma Defense Committee Andrey Kartapolov said Monday. “It cannot be ruled out that peacekeepers from the CSTO countries will be needed in the liberated territories of Ukraine, as well as the Donetsk and Lugansk People’s Republics,” Kartapolov told reporters. The CSTO is a Moscow-led regional security organization, which brings together six post-Soviet countries: Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan. Earlier this year, the bloc’s peacekeepers were briefly deployed in Kazakhstan after the country’s authorities requested assistance from the CSTO amid a wave of violent unrest.

-Russian political scientist Sergey Mikheyev used Russia's state-controlled TV to send a nuclear warning to the West. Speaking on Russia’s Channel 1, he threatened that the weapons that keep reaching Ukraine will see the war in Ukraine escalate into WW3. “The nuclear war is coming”, he added after warning “[the West] don’t understand what happens next”.

-A complete breakdown of ties between Moscow and Washington is impossible, US Ambassador to Russia John Sullivan has told the TASS news agency, noting that the two countries are tied to the United Nations Security Council and will never be able to avoid each other. In an interview published on Monday, the US envoy said contact between the two countries needs to be maintained, and stressed the importance of keeping embassies operational.

-Russia expects to receive as much as $6.37 billion in additional oil and gas revenues in June, its finance ministry said on Friday, as energy commodity prices have rallied since the Russian invasion of Ukraine.

-Russia has reportedly reached an agreement with Turkey to erect a de-mined 'grain corridor' which would provide safe passage to Ukrainian grain cargo ships out of the Black Sea port of Odessa via joint military escorts.

-Mexican President Andres Manuel Lopez Obrador has confirmed he will not attend the US-led Summit of the Americas, opting to skip the event due to its refusal to host the leaders of Nicaragua, Venezuela and Cuba. He announced on Monday that he would send Foreign Secretary Marcelo Ebrard in his place.

-The Kremlin has denounced fresh airspace closures by three eastern European countries which blocked a top level Russian diplomatic flight as a "hostile action" in Monday statements. Russian Foreign Ministry Sergey Lavrov was set to fly Sunday for an official trip to Serbia, but his plane was blocked by the countries surrounding Serbia, which includes Bulgaria, North Macedonia and Montenegro. All three countries, including the tiny Serb breakaway nation of Montenegro, are NATO members.

-India has successfully tested its nuclear-capable Agni-4 ballistic missile, with the country’s Defense Ministry calling the trial a “routine” launch. The locally developed munition is said to be capable of striking targets thousands of miles away. Carried out from Abdul Kalam Island in the state of Odisha on Monday, the missile test encountered no major issues and was deemed a success, the military announced in a press release.

-"The U.S. and South Korean militaries launched eight ballistic missiles into the sea Monday in a show of force matching a North Korean missile display a day earlier that extended a provocative streak in weapons demonstrations," The Associated Press reports. North Korea on Sunday had fired eight short-range missiles, marking what international reports said is a single-day record for most ballistic missile launches from the north. The series of launches came over 35 minutes from at least four separate locations, including both coasts and from north of the capital, among inland areas. In responding quickly with its own corresponding Monday launches, the South Korean military described that "The tit-for-tat missile launches were aimed at demonstrating the ability to respond swiftly and accurately to North Korean attacks."

According to details in the AP, "The allies’ live-fire exercise involved eight Army Tactical Missile System missiles — one American and seven South Korean — that were fired into South Korea’s eastern waters across 10 minutes following notifications for air and maritime safety, according to South Korea’s Joint Chiefs of Staff and U.S. Forces Korea."

-While there is traditionally a pick up in demand as winter approaches, LNG shipowners and brokers say an unusually early annual rush is under way for the likes of the UK’s Shell, France’s TotalEnergies and China’s Unipec to secure enough shipping capacity to transport the superchilled fuel during the peak winter demand season. As a result, rates to charter an LNG tanker for a year are trading near their highest level in a decade at $120,000 per day, up more than 50% on a year ago, according to Clarksons Platou Securities.

-Billionaire entrepreneur Elon Musk has questioned why staff at the US Department of Justice (DOJ) haven't exposed the client list of the pedophile Jeffrey Epstein. The Tesla boss has also drawn attention to the unusual indifference of establishment media outlets. “Only thing more remarkable than [the] DOJ not leaking the list is that no one in the media cares,” Musk said on Saturday in a Twitter post. “Doesn’t that seem odd?” Musk attached the comment to a meme entitled “Things I’ll never see in my life,” showing illustrations of a fire-breathing dragon, a dinosaur and a unicorn, along with the words “Epstein-Maxwell client list.”

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