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A severe oil spill shows the dangers of Russia's dark fleet

This photo taken from a video released by the Russian Southern Transport Prosecutor's Office, shows a Volgoneft-212 tanker wrecked by a storm in the Kerch Strait, Russia, Sunday, Dec. 15, 2024.
This photo taken from a video released by the Russian Southern Transport Prosecutor's Office, shows the Volgoneft-212 tanker wrecked by a storm in the Kerch Strait, Russia on Sunday, Dec 15, 2024.

The Russian Southern Transport Prosecutor's Office via AP

  • Two Russian vessels were damaged during a heavy storm on Sunday, causing a massive oil spill.
  • The tankers, both over 50 years old, carried nearly 9,000 metric tons of oil products.
  • On Monday, the EU sanctioned 52 dark fleet ships.

A massive oil spill involving two Russian tankers is underscoring the dangers of the dark fleet of ships that's been boosting President Vladimir Putin's war chest.

On Sunday, the Volgoneft 212 and Volgoneft 239 vessels were damaged during a heavy storm, discharging 3,700 tons of low-grade fuel oil into the Kerch Strait between the Russian-occupied Crimean Peninsula and Russia.

Both ships are over 50 years old and were carrying nearly 9,000 metric tons of oil products in total, reported TASS state news agency.

One crewmember died, and 12 were rescued from the Volgoneft 212, which split in half. All 14 crew aboard the Volgoneft 239 were rescued.

Greenpeace Ukraine has warned of an "environmental catastrophe" in the Kerch Strait.

While the extent of damage depends on the product involved, the region already experienced "severe damage to the environment" in 2007 when 1,200 to 1,600 tons of oil was spilled," Greenpeace said.

Aging ships are transporting Russian energy

The problem is more than environmental.

The G7 imposed an oil price cap on Russian oil in December 2022, prompting Russia to grow its shadow network of mostly aging ships.

Using that shadow fleet of ships has helped Russia circumvent Western restrictions and allowed it to continue trading its oil at market prices, according to the European Union.

However, because many of those ships are old, they are also more prone to accidents. Should the ships not have adequate insurance, the burden of clean-up and salvage costs could fall on coastal countries.

Last month, 206 out of the 369 vessels that exported Russian crude oil and oil products were shadow tankers, according to the Finland-based Centre for Research on Energy and Clean Air, a think-tank.

About 30% of the shadow tankers carrying Russian oil were at least 20 years old, according to CREA. Major Western oil companies generally do not use ships above 15 years old.

Europe to step up checks on tanker insurance

The European Union is already cracking down on Russia's dark fleet.

On Monday, the EU sanctioned 52 dark fleet ships. That's in addition to the 27 ships it had previously sanctioned. These vessels will not be able to access EU ports and services.

"These ships have been found to be engaged in high-risk shipping practices when transporting Russian oil or petroleum products, in arms deliveries, grain theft, or supporting the Russian energy sector," the European Commission said in its announcement.

A group of European countries β€” including Denmark, Estonia, Norway, and Sweden β€” is also planning to increase checks on the insurance coverage of tankers carrying Russian oil, Bloomberg reported on Monday, citing people with knowledge of the matter.

Bloomberg's sources said they expect no consequences for ships that are short on their coverage in the immediate term, although the information collected could help with the crafting of such measures in the future.

Read the original article on Business Insider

China is studying sanctions on Russia to figure out how to handle them if it invades Taiwan, report says

A tank fired live rounds during a nighttime exercise simulating a response to a Chinese attack in Penghu, Taiwan, on October 24, 2024.
A tank firing during a nighttime exercise simulating a response to a Chinese attack in Penghu, Taiwan.

Daniel Ceng/Anadolu via Getty Images

  • China is studying the effects of Western sanctions on Russia to prepare for any invasion of Taiwan.
  • Its officials have visited Russian agencies combating sanctions, The Wall Street Journal reported.
  • It also set up an interagency group to provide reports on how to reduce the impact of sanctions.

China is closely monitoring the effects of Western sanctions on Russia in order to prepare for a possible invasion of Taiwan, The Wall Street Journal reported, citing people familiar with the matter.

Unnamed individuals told the outlet that China formed an interagency group in the months after Russia's full-scale invasion of Ukraine in 2022. Its aim was to provide regular reports on how to reduce the impact of sanctions should the US and its allies impose similar measures on China in the event of an armed conflict over Taiwan.

They also said that Chinese officials regularly travel to Moscow to meet with Russia's central bank, finance ministry, and other institutions involved in combating sanctions.

One unnamed person familiar with China's outreach on sanctions said that Beijing is "very interested in practically everything: from ways of circumventing them to all sorts of positive effects, such as incentives for the development of domestic production."

Alexander Gabuev, the director of the Carnegie Russia Eurasia Center, told the Journal that Russia is serving as a "sandbox" for China for how sanctions operate and how they should handle them.

"They know that if there is a Taiwan contingency, the tool kit that will be applied against them will be similar," he said.

The US and its allies have imposed multiple rounds of sanctions on Russia since the start of the war.

Russia has managed to mitigate some of the effects by turning to intermediaries, bartering, and trading with non-sanctioning countries, including China, India, and Turkey.

Even so, Russia's economy has been heavily impacted by the ongoing conflict and the Western sanctions imposed on it.

Russia's central bank hiked its key interest rate to a record high of 21% in October to combat inflation, and last month the rubleΒ droppedΒ to a two-year low against the dollar.

Russian companies and defense firms have recently said they've scaled back their operations and struggled to turn a profit due to high interest rates and sanctions.

Alexander Libman, a professor of Russian and East European politics at the Free University of Berlin, told BI that it doesn't surprise him that China is trying to learn from Russia's experience.

"China has always tried to understand how it can avoid Russia's mistakes, at least since the collapse of the USSR, which was very carefully studied in Beijing," he said.

Libman added that China has probably already learned that its economy can adapt to "nuclear" Western sanctions through trading with other countries, adapting production facilities to quick and unpredictable changes of supply lines, and living without access to Western technology.

"Essentially, the experience of the last three years substantially reduced the fear of large authoritarian states with respect to Western sanctions, and this is very concerning," he said, adding that China-Russia economic cooperation would make any future Western sanctions against China less effective.

People close to China's decision-making process told the Journal that the existence of the research group does not suggest the country is preparing for an invasion of Taiwan, but rather for the "extreme scenario" of an armed conflict and its economic consequences.

However, some military analysts and defense officials have predicted that a Chinese invasion of Taiwan could happen within the next few years.

Read the original article on Business Insider

Putin tells Russians there's no reason to panic as the ruble sinks, but analysts say its economy is in trouble

A close-up of Putin looking upward.
Russian President Vladimir Putin said there was no reason to panic about the ruble's slide.

REUTERS/Yves Herman

  • Russian President Vladimir Putin said the ruble's plunge to two-year lows was no cause for panic.
  • The Russian currency hit its lowest level against the dollar since March 2022 this week.
  • Analysts say Russia is under pressure from inflation, military spending, and falling oil prices.

Russians shouldn't stress about the ruble tumbling to two-year lows, Vladimir Putin said Thursday. Analysts told Business Insider there was plenty of cause for concern.

The Russian leader told reporters that the "situation is under control" and that "there are absolutely no grounds for panic," according to a Google translation of a report from the RIA Novosti news agency.

Putin attributed the ruble's fluctuations "not only to inflation but also to budget payments and oil prices," along with many seasonal factors.

The Russian currency traded at 114 to the dollar on Wednesday, its weakest level since March 2022, shortly after the Ukraine invasion began. It was about 84 in early August, meaning the currency has depreciated by 36% in under four months. A greenback was worth about 108 rubles on Friday.

Russia's central bank stepped in to shore up the floundering ruble on Wednesday. It suspended purchases of foreign currency on the domestic market for the rest of this year to reduce volatility.

A Wednesday headline in the state newspaper Rossiyskaya Gazeta read, "Panic attack for Russia's currency market." The Kommersant newspaper warned readers to "buckle up your rubles."

The ruble's latest plunge follows the US sanctioning Gazprombank, one of Russia's largest lenders. The restrictions limit the bank's ability to access global financial markets and handle energy payments.

Russia also fired a hypersonic missile into Ukraine last week after its opponent launched missiles at targets inside Russia for the first time. The escalation has raised concerns of further economic disruption.

A weakening ruble benefits Russian exporters by making their goods more competitive in global markets. But it threatens to accelerate inflation by raising the cost of imports, leaving sellers little choice but to increase their prices. Stubborn inflation has already spurred Russia's central bank to raise the main interest rate to 21%, the highest level since 2003.

The Russian economy has suffered from Western sanctions imposed since Putin's invasion of Ukraine, with energy revenue tanking by almost a quarter last year. Other countries, such as India, have snapped up Russian oil instead, tempering the impact of price caps and other penalties.

Mounting pressure on Russia

Robin Brooks, a senior fellow focused on the global economy and development at the Brookings Institution, posted on X that the ruble's collapse shows how vulnerable Russia is to sanctions.

He also said the European Union's reluctance to impose certain penalties might have staved off economic disaster in Russia.

The collapse of Russia's Ruble (black) is a reminder how badly the EU failed on Russia. It follows the recent US sanctioning of Gazprombank, which the EU opposed for a long time. Russia could have been sent into deep financial crisis 2 years ago. The EU didn't let that happen... pic.twitter.com/XbOwqiABRd

β€” Robin Brooks (@robin_j_brooks) November 28, 2024

George Pavel at the trading platform Naga.com told BI the ruble's dive had been driven by rising inflation and a widening budget deficit fueled by heavy military spending.

"Russia's economic path looks unsustainable barring major changes," he said, ticking off concerns such as slowing growth, stubborn inflation, a tight labor market, and the massive cost of the Ukraine war.

Brent crude is trading at just over $70 a barrel, and sliding oil prices pose an existential threat to Russia, said Kathleen Brooks, research director at XTB.

"Russian income is shrinking at the same time as defense spending is surging as the war with Ukraine enters a more intense phase," Brooks said. "While President Trump may go some way to ending the Russia-Ukraine war, his policy on energy and plans to get the US pumping even more oil could weigh on the oil price further in 2025, which is bad news for Russia."

Read the original article on Business Insider

Chip-supplier stocks jump as the US weighs up fresh China sanctions

chip
US sanctions are aiming to restrict China's access to cutting-edge chips.

iStock; Rebecca Zisser/BI

  • The US is planning new curbs on chip exports to slow China's AI development, multiple reports say.
  • It could blacklist 200 Chinese semiconductor equipment manufacturers, Wired reported.
  • Targeting Chinese chip equipment makers could benefit European firms such as ASML.

The Biden administration is reported to be considering fresh sanctions against Chinese semiconductor equipment manufacturers, pushing up stocks of semiconductor suppliers in Europe and Japan.

Bloomberg reported that while the newly proposed sanctions still targeted Chinese chip fabrication plants, they put greater emphasis on targeting domestic firms supplying manufacturing equipment to chipmakers. The suggested curbs would add an extra 100 Chinese chip equipment makers to the entity list, the outlet reported.

That pushed the share price of ASML β€” the Dutch firm supplying crucial specialized equipment to chip manufacturers, including China's SMIC β€” up by more than 4.27% Thursday.

Tokyo Electron, which also sells equipment for manufacturing chips, saw its share price climb by more than 6% on Thursday.

The restrictions, expected as soon as next week, could also add chipmakers to the sanctions list, including key suppliers to the Chinese smartphone maker Huawei, Bloomberg and Wired reported, citing people familiar with the matter. The new proposals would affect fewer Huawei suppliers, the reports added.

As part of the sweeping sanctions, the US could add 200 Chinese chip firms to its trade blacklist, Wired reported. The controls could also include restrictions around trading memory chips, which are crucial for the development of AI models.

'Malicious attempts to block and suppress China'

Chinese stocks were down on Thursday. Hang Seng's stock slid by more than 1%, and the CSI and the Shanghai Composite are also down by 0.57% and 0.10%, respectively.

"This decline is occurring as the Biden administration is considering imposing additional restrictions on the sale of crucial semiconductors to China, possibly as early as next week," Jim Reid, Deutsche Bank's global head of economics and thematic research, said in a research note.

The Biden administration has worked to limit China's progress in the semiconductor industry in recent years by rolling out export controls aimed at cutting off its access to buying advanced AI chips and chip-making equipment.

American chip equipment makers and allies such as Japan and the Netherlands reportedly pushed back against earlier proposals.

Under the new rules, companies and even foreign firms that used American parts or software in designing and manufacturing AI chips will be required to obtain licenses to export to China.

Mao Ning, a spokesperson for China's foreign ministry, said at a press conference this week, "China is firmly opposed to the US overstretching the concept of national security, abusing export control measures, and making malicious attempts to block and suppress China."

The US Department of Commerce didn't immediately respond to a request for comment from Business Insider, made outside normal working hours.

Read the original article on Business Insider

Satellite images show Russia defying sanctions to give North Korea 1 million barrels of oil: report

In this satellite image marked up by Open Source Centre, the North Korean-flagged tanker Yu Son has been highlighted at Russia's Vostochny port on May 18, 2024.
In this satellite image marked up by Open Source Centre, the North Korean-flagged tanker Yu Son has been highlighted at Russia's Vostochny port.

Planet Labs/Open Source Centre

  • Russia has sent North Korea 1 million barrels of oil since March, according to satellite imagery analysis.
  • The findings underscore the growing partnership between the countries, which includes military aid.
  • The oil shipments are in defiance of UN sanctions, which Russia has ignored in the past.

An analysis of satellite images shows Russia defying sanctions to supply North Korea with at least one million barrels of oil this year, according to a new report.

The findings underscore the increasing partnership between the two states, and the extent to which Russia is willing to flout international norms to pursue its war in Ukraine.

The investigation, published jointly by the BBC and analysts at the UK-based Open Source Centre, used aerial and satellite images to track tanker shipping routes between Russia's port of Vostochny, in the country's far east, and five separate North Korean ports and oil terminals.

In the imagery, vessels would set out from North Korea riding high in the water, but on their return would appear fully laden, the group said.

In this image marked up by the Open Source Centre, the North Korean-flagged Yu Son tanker can be seen riding low in the water in the Yellow Sea.
In this image marked up by the Open Source Centre, the Yu Son was deemed to be carrying oil to North Korea.

Canadian Armed Forces/Operation NEON / Open Source Centre

In this image marked up by the Open Source Centre, the North Korean-flagged Yu Son tanker can be seen riding high in the water in the Yellow Sea.
In this image, the Yu Son looks empty.

Canadian Armed Forces/Operation NEON / Open Source Centre

The oil is payment for weapons and troops sent to aid Russia's war in Ukraine, the UK's foreign secretary, David Lammy, told the BBC.

Open Source Centre used the imagery to estimate that between March and November this year, Russia provided North Korea with at least a million barrels of oil β€” double the amount that North Korea is allowed to import under UN sanctions.

The UN Security Council β€” of which Russia is a permanent member β€” sanctioned North Korea in December 2017, forbidding the transfer of more than 500,000 barrels of oil a year to the state.

In March this year, Russia vetoed a UN Security Council resolution to extend the mandate of the expert panel tasked with monitoring the sanctions, effectively disbanding it.

Russia's Vostochny port in 2008. A number of cranes and shipping containers can be seen against the bay and a background of hills.
Russia's Vostochny port in 2008.

Ursula Hyzy/AFP via Getty Images

The Open Source Centre and BBC investigation, which Business Insider has not independently confirmed, appears to back up assertions made by a US official in May.

The unnamed official told Reuters that in March alone, more than 165,000 barrels of refined petroleum had left Vostochny headed for North Korea, and that "Russian shipments have already pushed DPRK imports above the 500,000-barrel annual cap."

The new findings also give further insight into the continued material exchanges between Russia and North Korea.

Analysts have warned for months about the growing partnership between the two countries.

North Korean leader Kim Jong Un, who signed a mutual defense agreement with Russian President Vladimir Putin in June, has supplied vast amounts of ammunition and β€” it is believed β€” artillery to Russia to help in its invasion of Ukraine.

Around 11,000 North Korean troops have also been sent to fight, according to Ukraine, with reports suggesting that as many as 100,000 could be deployed within a year.

The two states have not made clear what the terms of the exchange are, but South Korean intelligence has estimated that it could be receiving about $2,000 per soldier a month, as well as food and access to advanced technology.

Earlier this year, a Carnegie Endowment analysis said the partnership was taking shape against the backdrop of the "slow and irreversible breakdown of the Kim dynasty."

But the oil transfers give North Korea "a level of stability it hasn't had since these sanctions were introduced," Joseph Byrne, one of the authors of the Open Source Centre report, told the BBC.

Analysts have previously told BI that the relationship between the two states is largely transactional, but that for Kim it's a "win-win" as he gains access to much-needed resources.

Kim is "getting paid, getting access to foreign technology," Joseph S. Bermudez Jr., a North Korea defense expert at the Center for Strategic and International Studies, told BI last month.

Read the original article on Business Insider

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