The European Union’s executive arm said it’s providing Kyiv with €100-million in humanitarian aid and Moldova with €10-million to support refugees and host communities, while also deploying 84 more power generators in Ukraine ahead of winter. 

Despite unprecedented international sanctions, Russia’s central bank said the current account surplus for the first 10 months of the year widened amid a recovery in oil exports. Still, the $53.8-billion surplus is around four times less than the record set in the same period last year.

Latest developments

• Ukraine rallies US support as Germany rules out ammunition goal
• Ships still head to Ukraine ports despite Russian missile attack
• Russia’s cash inflow again gains momentum as oil exports recover
• Swedish battery firm targets €300m investment in Ukraine
• Putin and the West’s test of nerve in Ukraine: Balance of Power

Finland to tighten Russia border controls after immigrant influx

Finland’s government plans measures to deal with a sudden influx of migrants from third countries arriving at its border through Russia without the required documentation. 

The Nordic country, which earlier this year joined the North Atlantic Treaty Organization, is now monitoring the situation “very closely” after more than 130 asylum seekers, primarily from the Middle East and Africa, have arrived at southeastern border crossings since last week, Interior Minister Mari Rantanen told reporters on Tuesday. 

The government may cap the number of people allowed to cross the border or even close some of the crossing points, as well as centralise the asylum application processing into one place, Rantanen said. The measures would be taken if there was a threat to public order, national security or public health, she added.

The recent arrival of immigrants echoes the events of the winter of 2015-2016 when scores of Asian and Middle Eastern asylum seekers suddenly crossed the border in remote Arctic areas from Russia. Officials concluded the move was probably part of a hybrid attack masterminded in Moscow.

Russia appears to deviate from the normal practice of not allowing travellers to reach the Finnish border without the required documents, Finland’s Prime Minister Petteri Orpo said, adding that it now “gives us grounds to start taking action”. 

Russia’s current account surplus widens

Russia’s current account surplus widened, confirming the Bank of Russia’s recently revised expectations and providing support to the rouble, as a recovery in oil exports continued despite unprecedented international sanctions over the war in Ukraine.

The surplus for the first 10 months of the year — roughly the difference between exports and imports — amounted to $53.8-billion, still around four times less than the record set in the same period in 2022, according to data published on Tuesday by the central bank. The surplus in October exceeded $11-billion for the second straight month, after reaching the highest level this year in the previous month. 

The central bank pointed to a slight decrease in exports during October, but raised its estimate of the current account surplus in previous months after accounting for additional data.

The bank upgraded its current account forecast for the full-year 2023 to $60-billion from $45-billion just two weeks ago. Previously, it said the recovery in imports had stalled in the third quarter, while exports began to increase due to rising oil prices and “the diversification of geographical supply.”

In October, Russia was shipping crude through its ports at a rate close to the highest seen in more than four months. Moscow’s overall oil and gas revenue soared in October to the highest since April 2022 due to high oil prices and a pause in government subsidies to refiners.

Sweeping sanctions imposed by the US and its allies over Russia’s invasion of Ukraine mean that the Kremlin’s revenue from energy exports is a key source of hard currency for the country. The renewed flood of cash into Russia has helped the rouble to pare some of its losses since the beginning of the year amid worsening trade conditions.  

Russia’s seaborne crude flows ease before Opec+ meeting

Russia’s seaborne crude shipments eased slightly ahead of a meeting of Opec+ oil ministers later this month, bringing flows back below the level pledged by Moscow. The move comes after exports surged in October.

About 3.2 million barrels a day of crude were shipped from Russian ports in the week to 12 November, tanker-tracking data monitored by Bloomberg show. That was down by 40,000 barrels a day from the period to 5 November, but still 700,000 barrels a day above the levels seen in August. 

Moscow said in early August that it would prolong export restrictions at a reduced rate of 300,000 barrels a day below their May-June average level until the end of the year, a policy confirmed earlier this month. That would imply seaborne shipments of 3.28 million barrels a day if the burden falls entirely on crude. But the reduction is spread across both crude and refined products, Deputy Prime Minister Alexander Novak told Interfax last month after the government imposed a fuel export ban.

The Opec+ group of oil producers, jointly led by Russia and Saudi Arabia, meet in Vienna on 26 November when they will consider how to respond to a weakening oil market outlook. Analysts from the smaller Opec group argue that negative sentiment is “overblown”. 

US alarms oil tanker owners with Russian price cap letters

The US Treasury’s sudden flurry of letters to tanker companies for potentially breaching a Group of Seven price cap on Russian oil trades included a warning that those who don’t comply with the probe properly could face prison.

The communication, sent last week by the Office of Foreign Assets Control, represents a stark change of regulatory tone from Washington, with the US and its allies having previously taken a light-touch approach to enforcement. 

Two vessel owners, who asked not to be identified, said they would try to understand what the US Treasury’s goal was before deciding on whether to allow their vessels to go to Russia again. One of them said previous indications from regulators had encouraged owners to believe attestations of compliance were enough. 

Regulators’ concern in the past had been that disrupting Russia’s vast flows of petroleum could drive up oil prices. Now, it appears that Moscow’s rising oil revenues, helping to fund its war in Ukraine, are becoming hard to ignore.

Almost every grade of Russian crude has been trading above a $60 a barrel cap imposed by the Group of Seven for months, even if its flagship Urals grade has slipped back toward that level in recent weeks. 

In theory, that should have precluded firms in G7 nations from providing services including financing, shipping and insurance for the cargoes, but many carried on. They were relying on assurances from enforcement authorities that sufficient documentation — including an attestation that cargoes were purchased below $60 — would shield service providers from sanctions.

This week, though, it emerged that the Treasury wrote to about 30 firms controlling about 100 oil tankers in about 12 locations regarding their compliance with the cap.  

A copy of one of the letters, which was seen by Bloomberg, suggested a handful of tankers run by one firm might have transported Russian cargo at a price above the threshold. It asked for wide-ranging information and documentation about the shipments and the entities involved in them.

The letter said that not disclosing the requested information “may result in criminal fines, imprisonment or both”.

Two insurers also said that the tone of conversations with authorities has shifted in recent weeks, suggesting a stricter implementation of the price cap. 

It remains to be seen how aggressive the Treasury will ultimately be. 

If shipowners moving barrels under the price cap decided to stop hauling Russian petroleum, it might either curtail the nation’s exports or force more of the trade onto a large shadow fleet of vessels with questionable environmental credentials that Moscow has amassed since Western sanctions ratcheted up. Neither outcome would be ideal for Washington or Brussels.

But the letters are a reminder that US authorities can become more assertive at any time and that dealing in Russian oil could carry risks in the future 

Russia’s wheat exports slow on lower demand 

Russia’s wheat exports are slowing from their record pace as traders see lower demand from key importers. 

The country’s two bumper harvests have helped bring global prices down from all-time highs after President Vladimir Putin’s invasion of Ukraine, and shippers have been rushing to get those volumes to market. But demand is suffering as major buyers like Egypt and Tunisia struggle with access to hard currency, as well as Moscow’s efforts to control foreign sales at prices it deems too low.  

Wheat exports could fall to 4.6-4.7 million tonnes in November, Interfax reported, citing rail carrier Rusagrotrans, down from 5.1 million tonnes in October. That’s because of low prices for wheat from Russia, it reported Monday. “Prices are stagnating despite the fact that the global wheat balance remains tense,” analysts at the rail operator told Interfax. 

Efforts to put an unofficial floor under local prices have also complicated Russian exports in recent months by forcing some traders to renegotiate or even cancel deals. Consultant SovEcon has trimmed its Russia wheat export estimate for this season, partly because of the government’s export controls.

Russia’s grain harvest this year is expected to be the second-highest ever. Last year, it reaped record volumes of wheat that left it with carryover stocks to export this season. Shipments usually slow down in the winter as some river navigation closes due to ice. 

Ukraine rallies US support against occupying Russian forces

Ukraine is trying to win over doubters in the US to back a fresh push against occupying Russian forces before the presidential election.

Andriy Yermak, a top aide to Ukrainian President Volodymyr Zelensky, met with national security advisers from key allies during a visit to Washington amid opposition among some Republicans to continued support. As Yermak said he was preparing to meet US legislators on Tuesday, German Defence Minister Boris Pistorius said that the European Union would not meet a pledge to send Ukraine one million artillery shells by the end of March.

“The one million will not be reached, one must assume that,” Pistorius told reporters on Tuesday ahead of talks with EU counterparts in Brussels. “It’s the right question if the one million was ever realistic.” 

The bloc is missing its ammunition goal for Ukraine just as the Israel-Hamas war raises questions about whether the US and allies may be distracted from helping the government in Kyiv fend off Russia’s invasion. Despite vows to maintain support, the EU is struggling to agree to different pots of funding for Ukraine and plans for a 12th Russian sanctions package have also taken longer than planned.

Asked about the comments from Pistorius, Thierry Breton, the EU commissioner responsible for implementing the ammunition plan, said a goal to produce one million shells per year “will be met”.

While Valeriy Zaluzhnyi, Ukraine’s army commander-in-chief, recently told The Economist that the war was a “stalemate,” Yermak struck a more defiant tone, saying Kyiv’s counteroffensive was progressing, with Ukraine’s armed forces taking a foothold on the left, or eastern, bank of the Dnipro River. He called for more sanctions and additional weapons systems to help strengthen his country’s air defences before another expected Russian assault on civilian energy infrastructure with the approach of winter.

“A turning point in the war is approaching,” Yermak, head of the office of the president of Ukraine, said during an event at the Hudson Institute in Washington on Monday evening. “The next year will be decisive.”

The Pentagon this month urged Congress to break a deadlock and approve the Biden administration’s $61.4-billion request for emergency funds for Ukraine’s fight against Russia, part of a $106-billion package that would include aid for Israel and the US-Mexico border. Republicans in the House of Representatives have sought to separate the aid for Ukraine and Israel, an idea the White House opposes.

Yermak met with Secretary of State Antony Blinken and national security advisers from the US, Germany, UK and France while in Washington. The State Department said in a statement that Blinken “underscored ongoing US work together with our global coalition of more than 50 allies and partners to provide Ukraine the support it needs”.

Russia oil export revenues drop on sanctions, cheaper crude

Russia’s revenues from oil exports in October eased from a previous peak, as global crude prices dropped and the US imposed sanctions against vessels violating a Western price-cap, according to the International Energy Agency.

The nation received $18.34-billion from crude oil and petroleum-product exports last month, down $25-million from September “as lower international oil prices more than offset a narrowing discount for Russian grades”, the Paris-based agency said in its oil-market report.

“The first US Treasury sanctions imposed under the G7 price cap contributed to slightly weaker Russian crude prices in the latter half of the month due to rising shipping costs,” it added. 

Still, Russia’s monthly earnings from selling oil abroad remained near the highest level since October 2022. DM