© Yuri Belinskiy/TASS

Top stories from the Russian press on Tuesday, December 6th, prepared by TASS

The consequences of the West’s price cap on Russian oil are revealed, falling wheat prices and Russia and China move away from the dollar. These stories topped Tuesday’s newspaper headlines across Russia.

Izvestia: Oil prices may hit $100 thanks to West’s ‘price cap’

Given the introduction of the much-talked-about price cap on Russian oil, its price may soar above $100 per barrel, according to experts polled by Izvestia. This will happen if Russia legislatively forbids its domestic companies to sell raw materials to countries supporting this restriction which would limit supplies to the global market. Yet, there is another scenario where Russia can redirect its deliveries to Asia in which case the oil price may settle at the current $85 per barrel, according to analysts. The ban on imports of seaborne Russian oil to the EU as well as the price cap of $60 per barrel became effective on December 5. On the same day, Kremlin Spokesman Dmitry Peskov said that Russia was preparing retaliatory measures.

If Russia’s refusal to deliver oil to those countries that supported the price cap will be formalized and companies and private individuals will face fines or other sanctions for circumventing it, this will limit opportunities for private businesses to get around the mutual sanctions by Western countries and Russia, says Leading Analyst at Freedom Finance Global Natalya Milchakova.

Accordingly, supplies to the oil market will diminish and prices will soar, she noted.

That said, Russia may increase oil deliveries to Asia, for example, to India and China, says Dmitry Gusev, Deputy Chairman of the Reliable Partner association that brings together energy producers and sellers. Export deliveries to the EU will be redirected to other markets as much as possible and more than 100 tankers have already been purchased to this end, AMarkets Analytics Department Chief Artyom Deev points out.

According to him, oil prices are likely to remain in the $80-90 range in the coming months. On one hand, reduced oil production is expected in Russia over the restrictions, on the other, there is a trend toward lowered demand for raw materials due to the global recession, he added. However, if Russia takes drastic steps such as completely refusing to supply oil to unfriendly countries, its price may soar to $100 per barrel, the analyst added.

The current situation may benefit Russia as far as bolstered support for its shipbuilding goes which in the future may ensure its own oil transportation capacities since previously oil was frequently carried by foreign companies, Deputy Director General of the National Energy Institute Alexander Frolov concludes.

Nezavisimaya Gazeta: Global wheat prices drop by more than 40%

Global wheat prices returned to the levels seen at the beginning of the year losing more than 40% from their top values in 2022. However, prices for other food products are dropping as well. The FAO Food Price Index has been creeping down for two months in a row. The lowered prices and problems with exports do not bear any good news for Russia’s farmers. Some experts even predict an increased number of bankruptcies in this agricultural sector, while the Russian Ministry of Agriculture says that profitability of grain production will remain.

For Russia, the stabilization of global food prices and a steady ruble rate decrease the risks of imported food inflation, according to experts polled by the newspaper. They consider the current price decrease a temporary factor.

"A lot will depend on the future harvest of products imported to Russia and, of course, on the ruble rate dynamics," says Head of Macroeconomic Analysis at Finam Olga Belenkaya. She reiterates that the global community will soon face an overwhelming deficit of fertilizers due to reduced deliveries from Russia.

According to Leading Specialist of the Center for Agrofood Policy at RANEPA Denis Ternovsky, grain and sunflower oil prices are particularly significant for the Russian market. "The export of these products is no less important for manufacturers than deliveries to the domestic market, so export prices with certain adjustments are being carried over to internal food prices," he says.

"The suspended growth of food prices for Russia, as one of the largest food exporters in the world, mainly of wheat and other grains, is not the best news. For the state, this is quite expected since lowered grain prices are a consequence of Russia resuming its participation in the ‘grain deal’," notes Leading Analyst at Freedom Finance Global Natalya Milchakova.

Nezavisimaya Gazeta: Russia, China reduce dollar trade

China has noted the recovery of the cargo flow across the Russian border after the pandemic. According to Russian Prime Minister Mikhail Mishustin, about half of Russian-Chinese trade is not in dollars but in national currencies. He and his Chinese counterpart discussed this on Monday at a regular meeting between the top officials of both countries. Russia is in second place, following Saudi Arabia, as an oil supplier to China. The experience of trade without ties to the dollar may become one of the main subjects at the future meeting between the leaders of China and Saudi Arabia, experts told the newspaper.

Beijing’s long-term goal is providing the Chinese economy with a resource base in terms of energy products, industrial metals and food products. Some of them are now being exported from Russia to China at a discount to the Beijing’s benefit, says Maxim Kuznetsov, Co-Chair of the Facilitating the Turn to the East Association.

"China’s main interest is to unpeg oil from the dollar, that is, to reorient the trade in energy products to the yuan, or, rather, to its digital version," the expert says. "There is no significant difference for China between Saudi and Russian oil, and the current visit won’t impact the prospects of Russian oil exports, moreover, since payments with China are already switching to national currencies. It is more likely that China wants to use the experience of payments with Russia for its trade with Saudi Arabia," he explained.

Vedomosti: Armenia complains of Russia-led bloc’s ‘passivity’ in Azerbaijan conflict

On December 5, in Moscow, a session of the Parliamentary Assembly of the Collective Security Treaty Organization (CSTO) was held where Armenia’s delegation criticized the organization’s actions regarding the border conflict situation between Yerevan and Baku. According to Speaker of the Armenian Parliament Alen Simonyan, Yerevan is concerned over this structure’s insufficiently active policy as far as its assistance to Armenia is concerned. He noted that as a result, public opinion of the CSTO in Armenia has changed, although he assured that the country’s leadership was not talking about leaving the organization.

The traditional criticism of the CSTO by Armenia is caused by the fact that it didn’t manage to drag this organization into its conflict with Azerbaijan over Karabakh and border issues, says Senior Researcher at the IMEMO Center for Post-Soviet Studies Stanislav Pritchin. Against this background, it is not possible to talk about the CSTO’s existential crisis or the necessity to alter its charter or structure over one member’s disagreement with its actions, he says. The expert understands that Yerevan would like for the CSTO to be its security guarantor in Armenia’s standoff with Baku. Yet, the close economic relations the majority of CSTO states have with Azerbaijan do not allow the organization to unequivocally side with Armenia.

The CSTO is a military organization capable of competently fulfilling its tasks when its members mold them properly, like when its peacekeeping forces were used in Kazakhstan in January 2022, says Deputy Director of the Institute of CIS Countries Vladimir Zharikhin. The Kazakh leadership set specific goals in its request to the CSTO and the organization reacted swiftly and effectively, the expert reiterates. However, when the organization is asked to be "more belligerent" and "more interested" in the sovereignty of any country than its own leadership, like with Armenia, then the CSTO has difficulties fulfilling such requests, he says. It is important to remember that the roots of the existing Armenian-Azerbaijani conflict are rather in the violation of the territorial integrity of Azerbaijan, and one gets the feeling that the Armenian leadership is less interested than the CSTO in a settlement, which should take place not at the level of a military organization, but in the political sphere, says Zharikhin. The same concerns the Tajik-Kyrgyz border conflict, the expert concluded.

Izvestia: Is Iran really going to disband the morality police and can this appease protesters

Iran has not yet dismissed its morality police and the prosecutor general who made this announcement was misunderstood but the authorities are considering this option in order to calm the protests, according to experts interviewed by Izvestia. In particular, a scenario along the lines of Saudi Arabia is possible where such guidance patrols forfeited the right to detain and question people. Iran may go for it in order to avoid the middle class getting involved in the demonstrations, according to analysts. However, in their opinion, these half-measures are hardly capable of suppressing the rallies which have been underway since September because they won’t resolve any issues more serious than wearing a hijab.

Right now there are too many contradictory statements from the Iranian officials so it is not possible to say exactly what’s going on, Senior Fellow at the Arab Gulf States Institute in Washington Ali Alfoneh told Izvestia. He had an impression that instead of dismissing the morality police or changing the hijab law, currently the regime is incapable of systematically ensuring compliance with legislation anymore.

An expert on Iran and lecturer at Hebrew University of Jerusalem Vladimir Mesamed thinks that the authorities of the Islamic republic are making concessions after all. According to him, the main signal is that officials have started a dialogue. The protest potential is being exhausted but the situation is likely to repeat itself because not a single objective that the protesters set before the government has been resolved, the expert concluded.