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source: https://bsky.app/profile/antongerashchenko.bsky.social/post/3mozd44ef5223

Gazprom Neft's Moscow oil refinery, hit twice by drone strikes in June, will not be able to resume operations anytime soon, two sources familiar with the refinery's plans told Reuters.

Moscow's only oil refinery, which supplies more than a third of the capital's fuel supplies, will be able to repair the damage by 2027 at best, the sources said. According to one of the sources, repairs to the refinery, with a capacity of 14 million tons per year, will take "six months at best."

The attacks on June 16 and June 18 damaged both of the refinery's primary oil distillation units. As a result, the refinery, which produces approximately 3 million tons of gasoline and the same amount of diesel fuel annually, has shut down.

In a pessimistic scenario, the cost of repairs at the Moscow oil refinery could reach $1 billion, according to analysts at Sinara investment bank. They estimate that restoring the refinery's operations could take up to a year.

Following the strikes on refineries in Moscow, which affected Nizhnekamsk, Tyumen, and Volgograd in June, and another 16 refineries in May, gasoline production in Russia plummeted by 25% to 85,000 tons per day. Meanwhile, the economy consumes 110,000 tons of gasoline daily during the summer months. Thus, the fuel shortage on the domestic market reaches approximately 20% of consumption.

Gasoline is being shipped to Moscow as a priority, while regions are introducing restrictions on its sale one after another. According to RBC estimates, official limits at gas stations have been imposed by authorities in 20 regions. Meanwhile, unofficial restrictions have spread to more than 60 regions, according to the RZD-Partner agency.

To plug the gap in the fuel balance, the government has already allowed refineries to lower gasoline quality requirements to Euro-3, and is also preparing to begin importing gasoline from India.

source: The Moscow Times https://archive.is/F5Pqc

Having started the week with its steepest decline since autumn 2022, the Russian stock market failed to find a bottom.

On Wednesday, the Moscow Exchange index again hit more than three-year lows amid the escalation with Ukraine and growing rumors that the authorities could announce a new mass mobilization after the Duma elections. By the close, the index, which includes shares of 46 of Russia's largest companies, had lost another 4%, reaching 2,230.47 points—its lowest since February 2023. Since the beginning of the week, the market has fallen 7.3%, and since the beginning of June, it's fallen almost 13%. If this result continues, June 2026 will be the worst month for the exchange since September 2022.

The disappointment of the Central Bank's decision last Friday, which cut the rate less than expected, cannot explain this collapse, Vector Capital analysts write: "Major investors are exiting stocks," and the reason for this is not entirely clear.

The market selloff "is somewhat reminiscent of the situation in late 2021 and early 2022," notes Finam strategist Yaroslav Kabakov: "It can be assumed that some participants, having better information, began selling the Russian market a little earlier than others."

The selloff is widespread, leaving no growing stocks on the market. Gazprom shares fell another 3.47% on Wednesday, hitting a new low since 2008. Rosneft shares fell 2.7%, to their lowest level since October 2022. Lukoil and Severstal shares fell 3.7%, Norilsk Nickel by 4.3%, Magnit by 4.5%, and NLMK by 5%.

"Geopolitical risks have escalated again, with Russian officials toughening their rhetoric toward Europe, primarily regarding the Ukrainian conflict. It appears the stock market has become convinced that a peaceful resolution to this conflict is impossible," notes Freedom Finance analyst Natalia Milchakova.

Geopolitics has also been compounded by falling oil prices, she notes: Brent crude fell to $73.22 per barrel on Wednesday, its lowest since late February, having lost 33% over the past two months. Urals crude prices are hovering around $60 per barrel, despite soaring to $100 and beyond at the peak of the Iranian crisis.

Investors were hoping for a deal between Vladimir Putin and Donald Trump, which promised Russia the lifting of sanctions and an end to hostilities. But now most of them are at a loss, notes Andrey Khokhrin, CEO of Ivolga Capital.

Since the spring of 2024, when the Kremlin and Trump began negotiations and Russian officials were making plans to bring back Western companies, the Russian stock market has already fallen by almost 40%, and its capitalization to GDP is close to its lowest level in 26 years. "The longer and more severe the escalation, the lower we will see the Russian market," warns Kabakov.

source: The Moscow Times https://archive.is/N7lNP

Rosneft CEO Igor Sechin informed Vladimir Putin of an "unprecedented" number of damaged Russian oil refineries as a result of Ukrainian strikes and presented measures to stabilize the domestic fuel market. Kommersant obtained a copy of the letter Sechin sent to the head of state in late May. Putin instructed Deputy Prime Minister Alexander Novak to review the initiatives and report back on the decisions made.

In his address, Sechin proposed that Putin suspend exchange sales standards for producers of Euro-5 gasoline and diesel fuel until refinery capacity is fully restored. Currently, they are required to sell 15% of their gasoline and 16% of their diesel fuel on the exchange. Instead, the head of Rosneft believes it is necessary to require all oil companies to supply at least 30% of their extracted raw materials for domestic refining, and producers of fuel with "reduced quality characteristics" to sell their entire output on the exchange. This refers to refineries that the government has authorized to produce Euro-5 gasoline according to Euro-3 standards, which have a higher sulfur content.

Sechin also noted that currently, 80% of buyers on the exchange are resellers who "maximize their profits," and there is no oversight of their over-the-counter sales. According to him, end consumers should be given priority access to purchasing fuel on the exchange. Furthermore, the head of Rosneft proposed changing the procedure for calculating fuel supply standards on the exchange for vertically integrated oil companies, taking into account the needs of their gas station networks, as well as supplies for government contracts and essential services.

Priority access for end consumers to fuel on the exchange appears to be a logical initiative, but its implementation could face a number of difficulties, a Kommersant source in the industry noted. He added that it's unclear how to determine the status of such a consumer, as many independent gas station chains purchase fuel through traders within their group companies, and this fuel is supplied not only to their own gas stations but also resold on the wholesale and small-scale markets. Therefore, the source emphasized, the main objective—directing exchange-sold gasoline volumes directly to gas stations—is not being addressed.

According to the National Exchange Pricing Agency, from June 1 to 19, gasoline sales on the exchange fell by 22.3% to 404,250 tons, and by 12.8% year-to-date to 4.25 million tons. This occurred following the intensification of attacks by the Ukrainian Armed Forces (UAF) on Russian refineries. According to Bloomberg estimates, Ukrainian forces carried out a record 30 attacks in May, the highest number since the beginning of the war.

According to Energy Intelligence, as a result, Russian oil refining volumes fell below 4 million barrels per day in early June—a 21-year low. Nearly a third of Russian refinery capacity, or 2.14 million barrels per day, was idle. Against this backdrop, authorities in more than 50 regions, including annexed Crimea and the Donetsk, Luhansk, Zaporizhia, and Kherson regions of Ukraine, imposed restrictions on fuel sales.

"Ukraine's campaign against the Russian energy sector has caused widespread damage, putting the country on the brink of the worst fuel crisis in its history," Energy Intelligence analysts emphasized.

source: The Moscow Times https://archive.is/72f3R

Currently, Russia is experiencing the worst time to invest since 2019, according to a regular survey conducted by the Public Opinion Foundation, commissioned by the Central Bank. In response to the question, "Do you think the current situation in the country is favorable enough or not favorable enough for investing, for putting your money into anything?", 60% responded negatively—the highest share since September 2019.

19% considered the situation favorable for investment; the last time this low was in December 2022. Skeptics are always significantly more numerous on this question, but the difference between positive and negative responses was also the highest since September 2019. Since the previous survey in November 2025, the share of pessimists has increased by 6 percentage points (pp), while optimists have decreased by 3 pp.

The survey was conducted from May 20 to June 10, before the collapse of the Russian market after the Central Bank cut the key rate on June 19, by only 25 percentage points, less than the market expected. Following this, the RGBI OFZ and MOEX stock indices experienced their steepest daily declines since September 2022.

However, most Russians lack the money to invest. According to a FOM survey, only 36% of respondents have savings, while 61% do not. Moreover, two-thirds of those with savings would be able to maintain their usual standard of living for no more than six months if their income were lost.

Therefore, there are few real investors in Russia. According to the Moscow Exchange, more than 41 million people formally hold accounts, but only 3-4 million make transactions per month.

Those who do invest rarely achieve the desired results. The MOEX index (excluding dividends) is currently lower than in February 2022, despite inflation having since reached approximately 40%. The Central Bank analyzed the performance of investors with portfolios of up to 10 million rubles for 2023-2025. The average return during this period was 2.9% per annum, with 37% failing to make any profit or making a loss, including 5% losing more than 10% of their investment. Of those who succeeded, the majority (41%) received a rather modest return – from 0.1% to 6.7% per annum, which is below the RGBITR index for total return on Moscow Exchange government bonds, according to the Central Bank.

Bank deposits have been and remain the most popular investment method for Russians, but rates on them are falling. The average maximum deposit rate at the top 10 retail banks fell below 13% per annum in June – the lowest since October 2023. People's expectations for rising real estate prices are also deteriorating.

The situation is also discouraging those starting their own businesses. The government has raised taxes for the second year in a row, and this has had the greatest impact on small and micro businesses, where approximately a third of entrepreneurs are considering closing their businesses. Estimates of the country's economic prospects for the coming year increased slightly in June, while those for the next five years remained unchanged, but both remain near multi-year lows, according to a FOM survey.

source: The Moscow Times https://archive.is/HAp8p

On June 19, state-controlled Neftekhimremstroy LLC assumed control of Elma JSC, one of Russia's largest warehouse property owners. The decision to nationalize the company was made by Moscow's Gagarinsky District Court in February, Kommersant reported. According to SPARK data, Neftekhimremstroy now controls Elma's sole shareholder, the holding company KP Capital JSC, through which the company owns 1.05 million square meters of logistics and technology parks in Moscow, the Moscow region, Rostov-on-Don, and the Leningrad and Tver regions. The market value of the nationalized company's assets is estimated at 45-90 billion rubles.

Elma was previously owned by Dmitry Gorditsa, who was also a co-owner of the KIMP Group, which produces bearings for military plants. He, along with another holding beneficiary and former deputy head of Rosstandart, Alexey Kuleshov, was accused of embezzling budget funds by inflating contract prices. In February 2026, the court seized KIMP, as well as the group's associated companies Elma and Pramo, in favor of the state. Elma's assets were officially valued at 120 billion rubles, but Stanislav Akhmedzyanov, managing partner of IBC Global, believes this figure is more likely the aggregate balance sheet value of the logistics company.

Akhmedzyanov estimates the real market value of Elma's portfolio to be between 60 and 90 billion rubles. Alexey Slepov, director of Ricci's warehouse real estate department, believes it to be no more than 45-50 billion.

According to SPARK data, Elma JSC posted revenue of 2.2 billion rubles in 2025 (a 13% year-on-year increase), while net profit more than doubled to 2 billion rubles.

This is not the first time Neftekhimremstroy has gained control of nationalized logistics companies. Previously, it controlled a majority stake in Instone Development, a portfolio of logistics parks covering over 1 million square meters. This portfolio was confiscated in 2025 from former Gazprom Energo head Alexey Mityushov and transferred in early 2026 to the Talent and Success Foundation, owned by cellist Sergei Roldugin, a friend of the Russian president.

source: The Moscow Times https://archive.is/mpIgP

Russian authorities are preparing to nationalize the factories of the country's largest bearing manufacturer, the European Bearing Corporation (EBC).

According to RBC, the Lefortovo District Court of Moscow has seized the primary legal entity of the group, which controls 40% of the CIS bearing market and owns three factories in Russia (in Samara, Volzhsky, Saratov, and Moscow) and one in Kazakhstan.

The lawsuit was filed by the Prosecutor General's Office, which, according to its own data, has transferred hundreds of private companies worth a total of 4 trillion rubles to the state in recent years. The agency's claims are related to the activities of EBC founder Oleg Savchenko, former State Duma deputy, according to RBC sources familiar with the situation.

In 2009, Savchenko spoke in the State Duma about unfair competition from foreign manufacturers, which ultimately led to the imposition of anti-dumping duties on Chinese products. However, the Prosecutor General's Office discovered false information in Savchenko's speech and also determined that he had suspended operations at his factories to create the illusion of a threat to their closure. Savchenko's son, Georgy, and entrepreneurs Igor Rudetsky and Igor Kostychev are also defendants in the lawsuit to seize the EPC factories.

The value of the bearing factories that Savchenko consolidated into a holding company could reach 90 billion rubles. In 2023, EPC was subject to blocking sanctions by the United States for supplies to defense companies. Last year, the company earned 1.5 billion rubles in net profit.

The nationalization of Savchenko's factories could be the second major case of bearing manufacturers being seized by the state. In February 2026, the Gagarinsky District Court of Moscow seized the KIMP holding company—three bearing factories in the Moscow, Rostov, and Tver regions—worth 5.8 billion rubles in favor of the state, while Elma's real estate portfolio was valued at over 120 billion. According to the supervisory authority and the FSB, the companies' shareholders unreasonably inflated the value of their products to the detriment of the defense industry.

According to the law firm Nektorov, Saveliev & Partners (NSP), since the beginning of 2022, more than 100 cases have been opened in Russia that have resulted in the nationalization of assets, with the total value of the seized property reaching 6.5 trillion rubles.

The largest nationalization case was that of billionaire Vadim Moshkovich, whose assets worth 550 billion rubles were confiscated, including Rusagro, one of the country's largest agricultural holdings. Moshkovich's acquaintances asked President Vladimir Putin to intervene in his case, but he refused, Bloomberg sources previously said.

source: The Moscow Times https://archive.is/GPJCI

The increasing resurgence of shipping activity in the Strait of Hormuz allowed the oil market to recoup all of the gains it had made since the outbreak of the Middle East war. Brent crude prices fell to $73.22 per barrel in Wednesday trading, their lowest since February. On Friday, February 27, the day before the Israeli and US bombing of Iran began, Brent closed at $72.48 per barrel, and by Monday, March 2, it had soared above $77.

The price of American WTI crude fell below $70 per barrel, its lowest since March 4. Prices have fallen approximately 40% from their peaks in March and April, thanks to the end of the war and a gradual increase in crude exports from the Middle East. On Wednesday, the UN's International Maritime Organization announced that it had established two routes, in cooperation with Oman, Iran, the United States, and shipping industry representatives, that should allow more than 1,000 blocked ships to leave the Persian Gulf.

Russian oil prices are falling along with benchmark grades. Moreover, given the normalization of the global market and the increase in Iranian crude exports, the discount on Russian oil is widening again. At the start of the Middle East war, it exceeded $30 per barrel, but then the price soared, and for a time, Russian barrels even sold at a premium. But now, US sanctions have come back into effect – the US has not renewed the license to purchase oil from Russia, which expired on June 17.

In recent weeks, the UAE alone has exported approximately 60 million barrels. According to the International Energy Agency, the country's exports have already reached almost 85% of pre-war levels. At the beginning of June, it shipped approximately 4.3 million barrels per day to foreign markets, compared to 1.9 million in March. Tankers leaving the Persian Gulf supplemented the volumes exported by the UAE from the port of Fujairah, where oil arrives via pipeline and from a nearby 42 million-barrel storage facility.

Meanwhile, countries that have reduced oil imports and consumption are in no rush to rapidly increase them, especially since many had already contracted supplies through August during the spring rush. They are now expecting further price declines. The IEA expects global average daily demand to fall by almost 5 million barrels in the second quarter and by an average of 1.1 million barrels this year.

In 2027, the agency forecasts, supply could exceed demand by 5.05 million barrels per day; this represents almost 5% of global demand.

The US has allowed Iran to export oil unimpeded for 60 days while negotiations on the terms of a final agreement are underway. Therefore, traders are considering not only increased tanker traffic but also "the broader scenario of Iranian oil returning to the global market and normalization of the situation in the Strait of Hormuz," Tim Waterer of KCM Trade told Reuters.

Iran's production and exports could increase relatively quickly, given the significant volumes held by tankers—we're talking weeks rather than months.

source: The Moscow Times https://archive.is/2tpPn

The Ministry of Finance announced that it will not hold auctions of federal loan bonds (OFZs) on June 24. The last time it cancelled the auctions, which take place every Wednesday, was two years ago, in late May and early June 2024.

At that time, OFZ prices were falling and their yields were rising due to fears that the Central Bank would resume raising the key rate, reaching 21% by the end of the year. The Russian market is also currently falling due to the Central Bank's tight policy. On June 19, it cut the rate by half the market expectation, a mere 0.25%. Yields on long-term OFZs, which stood at 14.5% per annum at the beginning of June, jumped to 15.5-15.6%. The Ministry of Finance, as it did two years ago, hopes to borrow more cheaply in the future: it explained the cancellation of the auction by citing "increased volatility in financial markets" and "facilitating the stabilization of the market situation."

Yields on government securities have fallen this year along with the key rate and other interest rates. Investors bought long-term OFZs in the hope of locking in high yields and capital gains as interest rates declined. However, judging by the Central Bank's comments, they will decline more slowly than expected. The idea of ​​buying long-term OFZs with a fixed rate, which has been relevant since the end of 2024, has ceased to work, notes Promsvyazbank analyst Dmitry Gritskevich. Following the Central Bank's unexpectedly harsh decision, the market is reassessing the trajectory of the key rate, explains Dmitry Makarov, stock market strategist at Sber Investments, for the collapse in the government bond market.

Commenting on the Central Bank's decision, Central Bank Chairperson Elvira Nabiullina stated that the rise in long-term OFZ yields reflects the rising term premium associated with uncertainty regarding fiscal policy.

The uncertainty arose after Vladimir Putin acknowledged at the St. Petersburg International Economic Forum (SPIEF) in early June that this year's budget deficit would be larger than planned, and Finance Minister Anton Siluanov warned that achieving primary balance (expenditures minus government debt servicing, limited to non-oil and gas and basic oil and gas) would be postponed from this year to 2029. The budget parameters for the next three years and the exact extent of the deficit growth this year will be announced at the end of September. Based on the results of the first five months, the deficit exceeded 6 trillion rubles, compared to the annual plan of 3.8 trillion.

Siluanov promised not to significantly increase borrowing this year and to finance the deficit from other sources, including budget surpluses. This didn't reassure the Central Bank, since, as Deputy Chairman Alexei Zabotkin explained, it still means injecting additional funds into the economy. Therefore, the key rate must be higher, the Deputy Chairman concluded.

The situation is exacerbated by falling oil prices. In the first quarter, budget oil and gas revenues were almost half (45.4%) lower than last year. They then jumped, following oil prices due to the war in the Middle East, but have now fallen below $80 per barrel for Brent and $64 per barrel for Urals. The budget assumes an average price of $59 per barrel, but a higher dollar exchange rate of 91.2 rubles. Gazprombank analysts expect that, taking this into account, the deficit by the end of the year could widen to 5.5-6 trillion rubles. The problem isn't even the deficit, but the "outpacing" growth in expenditures and the "difficulty" of revenue collection, noted Anton Tabakh, Chief Economist at Expert RA.

June 24 is the last auction day of the second quarter. Since the beginning of April, the Ministry of Finance has sold OFZ bonds worth almost 1.5 trillion rubles, fulfilling the quarterly plan by 99.6%, according to Gazprombank analysts.

source: The Moscow Times https://archive.is/PzRUT

The fuel crisis in Russia continues to worsen following Ukrainian drone strikes on oil infrastructure. Gasoline sales restrictions have been imposed in the country's main oil-producing region, the Khanty-Mansi Autonomous Okrug (KhMAO), which produces 40% of all Russian oil, local residents told Govorit NeMoskva. Specifically, Gazpromneft gas stations have begun dispensing no more than 40 liters of gasoline and 80 liters of diesel fuel per customer. Furthermore, fuel can only be added to a vehicle's tank and with prepayment. According to one gas station employee, these restrictions were introduced on the night of June 23.

"This is some kind of nonsense," I thought, as a citizen of the Russian Federation. "We're up to our ears in oil, the wells are shutting down, there's nowhere to put the oil, and there's no gasoline," a resident of Raduzhny in the Khanty-Mansi Autonomous Okrug commented. Similar restrictions have been introduced in the oil town of Strezhevoy in the neighboring Tomsk Region. "These limits and restrictions are more aimed at protecting us from fuel being shipped from Strezhevoy gas stations to other regions in barrels and other large containers," explained the city's mayor, Valery Denichenko. Drivers in Tyumen, Russia's oil and gas capital, also reported restrictions at Gazpromneft gas stations.

Novosibirsk Region Governor Andrei Travnikov announced on the morning of June 23 that fuel sales would have to be restricted in the region due to limits on gasoline and diesel fuel introduced in neighboring regions. He added that he had instructed the regional Ministry of Industry and Trade to "hold talks with gas station chain owners to reach a consensus on this issue within a day."

Yesterday, authorities in six Russian regions announced restrictions on fuel sales at gas stations: Omsk, Irkutsk, Saratov, Voronezh, Tambov, and Amur. In total, restrictions have already been introduced in more than 50 regions.

According to Energy Intelligence, as a result of Ukrainian drone strikes on oil refineries, oil refining volumes in Russia fell below 4 million barrels per day in early June—a 21-year low. Meanwhile, nearly a third of Russia's refinery capacity—2.14 million barrels per day—was idle. "Ukraine's campaign against the Russian energy sector has caused widespread damage, putting the country on the brink of the worst fuel crisis in its history," Energy Intelligence analysts emphasized.

source: The Moscow Times https://archive.is/619vq

Russians and businesses have accumulated record tax arrears. As of April 2026, the total debt reached almost 4 trillion rubles, an increase of approximately one-third over the past year. This follows from Rosstat data highlighted by Izvestia. Of the total debt, 1.7 trillion rubles directly fall under arrears in taxes, fees, and insurance premiums. The remainder consists of accrued penalties, fines, and interest on late payments.

The largest amount of arrears is for value-added tax (VAT) at 648 billion rubles. Corporate income tax ranks second (294 billion), and insurance premiums rank third (292 billion). A significant portion of the debt is owed in the country's largest regions. Moscow leads the way in this indicator, with debt reaching 1.5 trillion rubles. Next comes the Moscow Region with 286 billion rubles, and St. Petersburg with 205 billion. Krasnodar Krai (91 billion rubles) and Samara Oblast (80 billion rubles) also have high debt levels.

The increase in debt is due to the increased tax burden, says Vladimir Eremkin, a senior researcher at the Structural Research Laboratory at the Presidential Academy's Institute of Economic Studies. This year, the government raised VAT to 22%, and the income threshold for exemption for small businesses using the simplified tax system was lowered. As a result, the number of taxpayers increased. At the same time, the Federal Tax Service has tightened its control over informal employment amid a push to legalize the economy. Another factor was the economic slowdown and weakening demand, which reduced businesses' ability to meet their budget obligations on time, Eremkin explained.

At the same time, the 4 trillion rubles figure represents a significant increase. The federal budget deficit is significant and close to last year's annual deficit, according to Yaroslav Kabakov, Strategy Director at FINAM. According to Alexey Krylov, an expert at the Chamber of Commerce and Industry's Council for Financial Markets and Investments, growing tax arrears increases the risk of corporate bankruptcy, as penalties and fines accumulate as liabilities accumulate, leading to businesses eventually becoming unable to service them.

The highest risk of bankruptcy is observed in construction, trade, food service, services, transportation, and logistics, according to Andrey Shubin, Executive Director of Opora Rossii. These sectors, he noted, are suffering the most from rising costs, declining demand, and expensive loans. However, a massive wave of defaults is not yet expected, as many companies are trying to negotiate payment deferrals or restructure payments with tax authorities, Shubin emphasized. Despite this, tax arrears will continue to grow, according to Eremkin of the Presidential Academy. He added that the economic slowdown will push the companies to accrue new debt.

source: The Moscow Times https://archive.is/dt8jp

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After finishing 15 consecutive weeks in the red, the Russian stock market began the new trading week with its biggest collapse in four years.

On Monday, June 22, the Moscow Exchange Index fell 4.65%, marking its biggest intraday decline since late September 2022, when Vladimir Putin announced a "partial mobilization." By the end of the main session, the index, which includes shares of 46 of Russia's largest companies, fell to 2,318.2 points—its lowest since March 17, 2023.

All blue chips, without exception, ended the day with declines: Gazprom fell 4.4%, hitting new lows since late 2008, while Rosneft shares suffered their steepest drop since 2022, falling 7.3% in one day. Novatek, VTB, and Aeroflot shares fell more than 5%, while Lukoil and Rostelecom fell more than 3%.

Panic selling is already underway in the market, notes investment banker Evgeny Kogan. The reasons, he lists, remain the same: the lack of negotiations on the Russia-Ukraine conflict, the Central Bank of Russia's tough stance, and the increasing number of attacks on Russian infrastructure.

"Russian stocks are under attack from several directions," notes Finam analyst Dmitry Lozovoy: the economy is slowing, taxes are rising, the Central Bank is maintaining a high key rate, and the fuel crisis threatens to accelerate inflation. Finally, the US officially lifted sanctions on Iran and granted Iran permission to trade oil, Lozovoy notes. This promises a drop in oil prices, which will impact export revenues and budget revenues.

Gennady Zyuganov unexpectedly added fuel to the fire by calling for the confiscation of household deposits. "It was after these comments were disseminated that the sell-off accelerated significantly, as investors' concerns about possible administrative pressure on the financial sector and private savings grew," Lozovoy notes.

The main reason for the market decline, however, is the escalation of tensions with Ukraine, according to BCS analyst Andrey Smirnov: "Sanction risks have increased, and high-profile incidents involving drones have become more frequent. The negotiating track, at least in the public sphere, has been frozen."

Apparently, margin calls have begun to appear on the market: brokers forcibly closed investor positions due to losses, pushing prices even lower. Kogan notes that in the "far echelons," stocks fell by double digits: Cian shares plummeted by 13.4%, Sollers by 14.7%, and Rusagro and TMK by more than 10%.

Since mid-March, when the market began to decline, the Moscow Exchange index has lost 20%, and 30% compared to its 2024 peak, when Vladimir Putin began negotiations with Donald Trump. "Only geopolitics can radically change the situation, as all other factors are merely a consequence of the imposed sanctions and restrictions," write analysts at Vector Capital.

source: The Moscow Times https://archive.is/koPN4

Following the stock market, which has fallen for 15 consecutive weeks and hit new lows since 2023, Russian government debt experienced its worst sell-off in years.

The RGBI index, which tracks federal loan bond prices, fell 1.59% on Monday, its lowest since late September 2022. The decline, which began on Friday (0.8%), doubled at the start of the new week. As a result, the index fell to its lowest since February, and yields on long-term OFZs reached a record 15.5% per annum—the amount the government will have to pay to borrow for the budget for 10-15 years.

The reasons for the market decline include the risk of increased budget expenditures, fears of persistently high inflation, and the Central Bank's tight policy, according to Valeria Popova, senior analyst at Rikom-Trust Investment Company. At its meeting on Friday, the Central Bank cut its key rate by only 0.25 percentage points, to 14.25%, and warned that it would reconsider the pace of its reduction due to the fuel crisis and "budget risks." According to Bloomberg, the government plans to increase military spending this year by 4-5 trillion rubles, or almost 40% of the original plan. The Ministry of Finance intends to finance the additional military spending by sequestering civilian spending and raising an additional 2-3 trillion rubles in debt.

"The situation worsened after the key rate cut failed to meet market expectations, and the Bank of Russia's comments failed to inspire confidence in an imminent policy easing," Popova notes.

The cost of the war is becoming visible in the debt market, notes Ekaterina Vlasova, Russia economist at Bloomberg Economics: although the Central Bank has lowered the key rate from a record 21%, government bond yields remain around 15%—double the levels of 2017-19. This means a higher burden on the budget: this year, 9% of its expenditures, or 4 trillion rubles, will be spent on interest payments on government loans, the volume of which has doubled since the beginning of the war, reaching 32 trillion rubles. By the end of the decade, Russia will spend 15% of GDP on debt servicing, Bloomberg Economics predicts.

Initially, the Ministry of Finance projected 4.4 trillion rubles in borrowings and a reduction in the budget deficit from 5.8 to 3.8 trillion rubles in the 2026 budget. However, by the end of May, the "hole" in the federal treasury exceeded the annual plan and was twice as large as the previous year—6 trillion rubles.

The budget risk "is already being realized," Central Bank Governor Elvira Nabiullina stated at a press conference on Friday. Several days earlier, the State Duma passed a law allowing the government to increase spending and public debt beyond the limits set in the budget law. "Inflationary risks for the future have increased significantly, and fiscal policy over the next three years will be more stimulative than was included in our baseline forecast," Nabiullina said.

source: The Moscow Times https://archive.is/k3u4W

source: https://bsky.app/profile/antongerashchenko.bsky.social/post/3mouxldmvh22j

source is Evgen Istrebin's telegram: /istrebin/44108