0725GMT//More drone-linked disruptions at EU airports; Ukraine strikes second-largest Russian oil refinery; Kremlin's rouble earnings from oil and gas fall
DRONE DISRUPTION AT EU AIRPORTS: Munich airport, Germany's second biggest hub, briefly suspended operations on Friday because of suspected nearby drone flights. Media reports also said the drones were spotted circling above a military base in Belgium on Friday. (COMMENT: Drones closed airports in Norway and Denmark last month. Officials have privately accused Russia of ordering drone flights near these airports as part of its 'hybrid warfare' project, but the Kremlin has denied this.)
UKRAINE HITS RUSSIA OIL REFINERY: Ukrainian drones hit the Kinef oil refinery for the second time in a month on Saturday, causing a fire. Kinef is the second largest oil refinery in Russia, producing roughly 6% of Russia's refined petrol products. Ukrainian drones have targeted oil refineries to cut Russia's petrol production capacity. (COMMENT: Reports have now said that Ukraine has knocked out 37% of Russia's oil refining capacity. It clearly sees this as an effective strategy.)
RUSSIAN MISSILE STRIKE ON UKRAINE KILLS FIVE PEOPLE: A massive Russian missile and drone attack on Ukraine on Saturday evening killed at least five people. Reports said that Russia fired 50 missiles at Ukraine and 500 drones. (COMMENT: The scale of Russian missile and drone attacks has increased markedly over the past few months. This is an indication that Russian military production has hit the high levels ordered by Putin. Ukrainian officials have also said that Russian missile and drone attacks have become more accurate and better at evading air defence systems.)
PUTIN CRITICISES US TOMAHAWK PLAN: Vladimir Putin said on Sunday that relations with the US "would be destroyed" if Donald Trump sent long-range Tomahawk missiles to Ukraine. Tomahawk missiles have a range of 2,500km, which brings Moscow into range from Ukraine. (COMMENT: Russia-Ukraine peace talks have stalled but if Trump did send Tomahawk missiles to Ukraine, it would definitely be considered by the Kremlin as a military escalation.)
KREMLIN OIL AND GAS EARNINGS FALL: Russia's earnings in roubles from oil and gas sales were 25% lower in September compared to the same period last year (582 billion roubles, which is roughly $6.3 billion), the Russian finance ministry said on Friday. This confirms a trend of lower earnings throughout the year. (COMMENT: This is a large drop in the rouble value of oil and gas sales and comes as Russian government economists try to balance the Kremlin's budget. There are some clear reasons for the fall in oil and gas revenues, though, that mitigate the drop. The main reason is that the Russian rouble in September was valued at an average of 82.9/$1, 10% higher than in September 2024. The average price of a barrel of oil has also dropped by around 20% in the past 12 months. Most of the fall in the Kremlin's rouble earnings from oil and gas sales is linked to the higher value of the rouble and the fall in oil and gas prices. There may have been a small drop off in demand as Russian customers worry about being hit by potential secondary US sanctions.)
RUSSIA-CHINA TRADE FALLS: Russia's trade with China fell by 9% in the first eight months of the year compared to the same period in 2024, said analysts from Russia's Gaidar Institute. They said that China has cut its purchases of all types of raw materials from Russia – from oil to timber. (COMMENT: This is surprising, as so many of the headlines are about how China is Russia's main trade partner. Clearly, the reality is more nuanced. We do know that Chinese companies, banks and businessmen are increasingly worried about being hit with secondary sanctions if they deal with Russian companies. A long-matured 'panda bond' from Rosatom may fail because Chinese companies just don't want to buy into it. A Russian businessman has now also said that China has restricted exports of high-precision machine tools into Russia.)