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RUSSIA TODAY: The War, the Ruble, and the Forever Change in Global Energy Markets By Evan Anderson Why Read: Russia has long dominated our worries - and our money. Geopolitically, as a business model the nation threatens most of its neighbors and seeks to extort or invade them. In the energy markets, Russian production has been key in both oil and gas for all of recent history. This week, we cover the state of play in both worlds, and why 2025 may see Russian relevance finally come to an end. ________
Since February of 2022, the balance of power in Europe has hung solidly on the success or failure of the Russian invasion of Ukraine. In an obvious bid to replace or expand the power of the former USSR, Vladimir Putin has sent hundreds of thousands of soldiers to flood the lines of eastern Ukraine in endless "meat wave" assaults, seeking to claw back some kind of victory after the stunning defeat of the initial attack on Kyiv in the spring of 2022. At this point in the war, many of our questions have been answered. There have been multiple collapses of Russian lines, from the initial brutal defeat of long columns heading to Kyiv to the short-lived march on Moscow by Wagner forces under Yevgeny Prigozhin, from the loss of most of Kharkiv region back in the 2022 Ukrainian counteroffensive to, now, the loss of and ongoing inability to fully retake a chunk of Russia's Kursk Oblast. All of these resounding defeats are, from a military standpoint, damning setbacks. The destruction of a significant portion of all existing Russian military equipment (representing most of the remaining non-nuclear hard-power assets left as a "Soviet legacy") in a war now beyond its 1,000th day is a loss significant enough in its own right. Yet Putin persists. So, too, have Western sanctions failed so far to effect an economic collapse inside Russia. Despite significant reductions in Russia's ability to manufacture goods and provide services to its citizens, a complete economic disaster has not materialized. Instead, the country has performed (as one might expect; more on this later) in a middling fashion, hobbling along, riding GDP growth from wartime production, escaping some sanctions through third-country imports, and coping with skyrocketing inflation each passing month in a stilted dance to keep the war going and unrest at a minimum. With so many variables (the Russian economy, international support - or lack thereof - for both sides, unexpected additional global events / catastrophes), it is often hard to discern what the future holds. Much has been made, particularly lately, of how long Ukraine can "hold out" if American support wanes under a new administration. But in a conflict defined by the aggression of one party, a conflict that threatens to continue to damage the global economy, food security across East Africa, global oil supply, and energy balances, the real question may be: How long can Russia hold out? A better understanding of where we stand now helps to clarify what to expect the effects of this horrific war to be, moving forward - not just on Russia itself, but on the world. To start, let's examine the situation where it matters most: in the trenches of eastern Ukraine.
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