By Ben Aris, Intellinews, 6/3/26
Ukraine hit St Petersburg oil terminals on the morning of June 3 just as Russia’s flagship St Petersburg International Economic Forum (SPIEF) kicks in a message designed to show that nowhere in Russia is safe from Ukraine’s long-range drones.
Ukraine drones flew over the city before diving into oil storage tanks on the Gulf of Finland only 17km from the conference centre where the event is due to begin today.
Residents posted photos and video footage of loud explosions and a massive fire after the city came under attack and black smoke rising over the St. Petersburg Oil Terminal, one of Russia’s largest fuel storage and export facilities.
Authorities immediately shut down the air space over Russia’s former imperial capital making it impossible for any delegates who have not already arrived in St Petersburg to reach the city. Leningrad Oblast Governor Aleksandr Drozdenko reported that 50 drones had made the 500km journey from Ukraine and were shot down over the region on June 3 but did not comment on the fires at the port. Nearly 30 flights delayed for over two hours and nine others diverted to other airfields, according to the Russian state news outlet TASS.
This is the fifth summit since Russia’s invasion of Ukraine over four years ago. The attack is part of a sustained campaign by the Armed Forces of Ukraine (AFU) to cut Russia off from its main export revenues, which has reduced Russia’s exports of refined products, but has yet to affect the overall volume of oil exports or reduce the Kremlin’s income from oil taxes.
The strikes have bitten into Russia’s refined production and forced Moscow to turn to its friend Belarus to cover the shortfall, but production has not fallen enough to spark a fuel crisis yet. While the drone strikes do significant damage, as IntelliNews reported, the payload on the long-range drones is not big enough to destroy a refinery and typically the damage done can be repaired within a few weeks.
The St Petersburg facilities boast a reported throughput of 12.5mn tonnes per year and have been repeatedly targeted, culminating last month with a series of attacks on the Primorsk and Ust-Luga terminals – the two biggest oil terminals on Russia’s western coast.
Dignitaries from over 130 countries and territories of the world are in attendance to show solidarity with Russia and as part of Russian President Vladimir Putin’s plan to rebuild Russia’s international and trade relations with the members of the Global South.
Amongst those in attendance are Uzbek President Shavkat Mirziyoyev, President of Tanzania Samia Suluhu Hassan, actor Stephen Segal and YouTube star Andrew Tate, as well as China’s vice president and Saudi Arabia’s energy minister. A member of US President Donald Trump’s administration is set to appear at the forum, the first known attendance at the event by an American official in several years.
Unusually, this year there is a large delegation of German businessmen in attendance as the resolve to keep the tough sanctions regime on Russia starts to crack and calls for restarting commercial relations with Russia slowly gather momentum.
Putin is due to give the keynote address on June 5. The new attack on St. Petersburg comes a day after Russia launched a devastating mass missile and drone strike against Kyiv, Dnipro, and other Ukrainian cities, killing at least 23 people, including two children, and injured over 100 others. The Kremlin said the strike was in retaliation for a Ukrainian drone strike on a student dormitory in the university town of Starobilsk on May 22 in occupied Luhansk Oblast in eastern Ukraine, which killed 21 students, injured 42 others and caused outrage in Russia.
Refinery throughput down
Repeated attacks on Russian oil infrastructure have reduced the throughput at Russia’s leading refineries and put domestic supplies of petrol and diesel under pressure.
Output is down by around 10% y/y according to official figures. Ukrainian attacks appear to have disabled most of the spare refining capacity that Russia traditionally maintained, according to Sergey Vakulenko, an independent energy analyst, and any more reduction in refining capacity will have a disproportional effect on supplies of fuel to the domestic market, say experts.
The Kremlin has expanded restrictions on fuel exports as a result, banning overseas sales of jet fuel in addition to earlier limits on gasoline exports. In occupied Crimea, Russian authorities have been forced to ration fuel due to shortages, limiting purchases to 20 litres and banning the filling of fuel canisters. Belgorod and Kursk regions, as well as in Ryazan and parts of the Moscow region, have also reportedly been affected by fuel shortages.
Due to the reduction of refined products, Russian oil companies have compensated by increasing the export of crude oil. Russian seaborne crude oil exports have climbed to their highest levels since the start of the war in Ukraine.
Average crude exports since the beginning of 2026 have reached 3.46mn barrels per day (b/d), about 120,000 bpd higher than in 2025 and above the previous post-invasion annual high of 3.36mn b/d recorded in 2023, according to Bloomberg’s calculations. Seaborne exports averaged 3.64mn bpd in the four weeks to May 31, Bloomberg reported, citing tanker movement data.
The four-week average value of crude shipments stood at about $2.24bn per week in the period ending May 31, down slightly from $2.38bn in the previous four-week period because of lower oil prices.
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Germans return to SPIEF as Russia sanctions resolve starts to fray
By Ben Aris, Intellinews, 6/2/26
German businessmen are going to the St Petersburg International Economic Forum (SPIEF), Russia’s premier investment forum that kicks off tomorrow.
In fact, German business never left Russia. Following the invasion of Ukraine hundreds of foreign businesses working in Russia said they would leave. In reality only one in ten made the exit. And once you drill into it, those like Apple, that shut down their franchises in Russia, actually continued to sell – just their products went via the traders in Turkey et al and their business didn’t stop at all. Everything just went back to the 1990s set up where intermediaries did everything.
Of those companies that didn’t leave, no country didn’t leave more than the Germans. And Germany had literally ten-times more registered businesses in Russia than any other European country.
When I first arrived in Russia I, and the Russians, assumed that their natural business partner would be the Americans. They are supposed to be the entrepreneurial risk-takers. As it turned out, the American firms are extremely risk adverse. From conversations with many Russian businessmen, they all complained that their US counterparties insisted on lengthy and complicated contracts and talks would go on for months. The Russians found all this a bit silly as they pointed out in the 90s those contracts were not enforceable anyway as everything had collapsed.
It soon became clear the people to do business with were the Germans. They were happy to simply sign an MoU and send some money to get started. If things worked well then they rapidly scaled up. It turned out that the Germans and Russians share a very similar mentality, which is not obvious at first glance.
And it worked very well indeed. The US is dominated by mega-corporations, but Germany’s economy is made up of the Mittelstand, thousands of small- and medium-sized enterprises (SMEs) some of which are not that small, employing dozens of people and with a turnover in the millions and tens of millions of euros. These companies are lean, nimble and entrepreneurial. And they are always looking for new markets. Russia was a paradise of unploughed fields hence the inflow of all these German companies. And thanks to the barriers to entry, as Russia was and is a hard market to work in, the upside is that also makes it extremely profitable. From the Russian side, thanks to the Soviet legacy, Russian businesses have an unslakable thirst for high quality specialist machinery. Vorsprung durch Technik. Throughout the last thirty years since the collapse of the USSR I think half of all Russia’s imports for that entire period has been machines.
While these firms have continued to work, what is new here is that the leading businessmen are openly participating in SPIEF. This is yet another sign that the resolve to “just increase the pressure on Russia a little more so it will collapse,” is crumbling. The rhetoric coming out of Brussels is as tough as ever – the 21st sanctions package is in the works and may target the scandalous Irish exports of aluminium to Russia – but on the ground, European businesses continue to do as much business with Russia as they can. Die Welt wrote a piece about the German delegation that included an interesting survey: two thirds of German business would like to see commercial ties restored, especially the gas. The more reserved panellists said that shouldn’t happen until after the fighting in Ukraine stops.
It’s gonna happen. We seem to be in silly season already and there are endless pieces about the “turning point” in the Ukraine conflict and how Russia’s economy is about to collapse. But this is all wishful thinking. A careful reading of the battlefield reports shows that the AFU is not taking “hundreds of kilometers” of territory back. What they are taking is “grey zone” territory that has few Russians in it. The AFR advances have slowed down, but that appears to be because they are coming up against the Defensive Line in Donbas.
As for Russia’s budget woes those are real too, but again, the budget deficit is only 2.5% of GDP – well below the EU’s excessive deficit threshold of 3% — while the number of European countries in the Excessive Deficit Club continues to grow with most of the biggest countries now members. That is another reason why the Germans are in SPIEF: they very badly need to make more money.
Russia’s Ministry of Finance (MinFin) has just done a deal with the oligarchs who are going to “voluntarily” contribute RUB300bn to the budget to help close the gap. Given the deficit is likely to be RUB4 trillion this year, that is not very much, but it is part of MinFin’s plan to squeeze a little out of everything and spread the load. It can’t afford to simply borrow everything as the cost of servicing the OFZ bonds is getting very expensive. When you add in the other stuff like dividends then it seems that Russian Finance Minister Anton Siluanov is going to cobble together a package to cover the short fall. For instance, the oil companies are earning excess profits already. Gazprom paid a whopping RUB51 per share in 2022 or RUB1.2 trillion all by itself. In the pre-sanctions era it used to pay out a mere RUB8 per share much to the annoyance of its shareholders and invest the rest in never-ending production and transport projects. This year we can expect the same sort of big state-owned company dividend payments from anyone who is making money.
Personally, I would love to go to SPIEF again. It’s White Nights in St Pete at the moment and the whole city is out on the streets deep into the night with most of the bars and cafes remaining open well into the small hours. And Russia’s elite throw parties so the whole event becomes a big social do. The metals oligarch Prokhorov used to throw one of the most famous open door parties every year until he quit Russia. And the talks and sessions at the conference are also fascinating as the discussions are surprisingly frank and realistic.
2008 was a vintage year and the high point of Russia’s move towards becoming a liberal modern economy. That year Professor Sergey Guriev was in charge of the economic blueprint and Medvedev was president. Guriev told me he filled the programme out with liberal reforms and massive privatisation plans and Medvedev didn’t change a word. Then the Great Financial Crisis happened and all that had to be abandoned.
Not sure what will come out of this year’s event, but we may look back and say it was a milestone in the reestablishing ties with Russia. Who knows. After all, the economy could collapse too. But I still think that Ukraine is closer to the edge than Russia.