MOSCOW, June 16. /TASS/. The US, Iran seek to end the Middle East conflict by signing a deal; Europe is seen as trying to derail Ukraine peace talks; and oil prices decline amid expectations of an end to the Middle East conflict. These stories topped Tuesday’s newspaper headlines across Russia.
Media: Will memorandum help resolve US-Iran conflict?
Iran and the United States have agreed to end all hostilities in the Middle East and restore freedom of navigation in the Strait of Hormuz. Iran’s nuclear program will be discussed in the next stage of dialogue between the two countries, Vedomosti writes.
Iran’s Supreme National Security Council has said in a statement that the agreement also includes an end to Israel’s military operations in Lebanon. Israel’s position is crucial to the deal, Iran expert Ismail Gibadullin said. Israeli Prime Minister Benjamin Netanyahu has no plans to step down and will seek to continue escalating regional tensions at least until the parliamentary elections scheduled for the fall, undermining any peace initiatives, the expert pointed out.
The US-Iran memorandum could remain in effect longer than the projected 60 days but it is a fragile framework, and any act of provocation may derail the agreement, Pavel Koshkin, senior researcher at the Russian Academy of Sciences’ Institute for US and Canadian Studies, said. Still, the very fact that the accord has been reached is important as an interim stage on the way toward ending the war in the Middle East, the expert noted, adding that the memorandum at least demonstrated the parties’ willingness to engage in dialogue.
The current contents of the memorandum are largely in line with Tehran’s interests rather than those of Washington as the document includes provisions on easing sanctions and pressure on Iran with regard to its nuclear project, as well as freezing military operations, political scientist Dastan Tokoldoshev told Izvestia. However, the expert is confident that the Iranians have no reason to celebrate just yet, particularly given divisions within the US leadership over the conflict and US President Donald Trump’s overall unpredictability.
Meanwhile, Israel’s elites have, as expected, no desire to view the US-Iran agreements as binding, Alexey Yurk, researcher with the Center for Middle East Studies under the Russian Academy of Sciences’ Institute of World Economy and International Relations, noted. “Undoubtedly, the US president is capable of using military aid as a powerful lever of pressure. Still, Trump is unlikely to resort to this tool, even though he has repeatedly demonstrated that there is nothing impossible for him,” the expert said.
The leaders of the E3 countries (the UK, Germany, and France) will try to take advantage of the current G7 summit in France to persuade US President Donald Trump to back their terms for resolving the Ukraine crisis. Meanwhile, Brussels continues to supply weapons to Kiev and impose new sanctions on Russia. This is why Moscow is unwilling to accept the EU as a mediator, instead favoring Washington, Izvestia notes.
“The latest statements, particularly those made by E3 officials, make it clear that Europe’s only goal in relation to negotiations is to end them as soon as possible. I mean, derail them,” the Russian Foreign Ministry’s Ambassador-at-Large Rodion Miroshnik said.
Brussels is unlikely to win Washington over on the Ukraine issue because its initiatives run counter to the ideas of Trump and his team, Denis Denisov, an expert at the Financial University under the Russian Government, explained. Still, there are currently no preconditions for a relaunch of peace talks, while developments on the battlefield largely suggest the opposite, Denisov noted. “Full-fledged negotiations require first and foremost the political will of the parties, but what Vladimir Zelensky has been saying and doing over the past few weeks completely contradicts this logic,” the political scientist elaborated. However, it’s possible that the US will begin to come up with new peace initiatives after resolving the Iran issue, political scientist Yaroslav Klimov suggested.
In the meantime, while G7 leaders continue to speak about peace and a search for compromises, Brussels is making decisions that run fully counter to the logic of diplomacy. EU foreign policy chief Kaja Kallas has announced the EU’s approval of a new list of sanctions against Russia, which she claims will deal a blow to Russia’s defense industry and the so-called shadow fleet.
The European Union’s policy of sanctions is clearly creating a deadlock. Continuous restrictions from Brussels demonstrate to Moscow that there is nothing to agree on with Europe. “Europe is a party to the conflict and it would be naive to accept it as a mediator,” Denisov emphasized.
Media: Oil prices down amid expectations of end to Middle East conflict
Brent crude prices fell below the $83-per-barrel level for the first time in three months. The market is responding to news of an agreement between the United States and Iran, which would reopen the Strait of Hormuz to commercial shipping, Kommersant reports.
“Although markets have already reacted to US-Iran peace options twice, reports of the memorandum on a 60-day ceasefire and plans for a more enduring peace drove oil prices down,” Ruslan Klyshko, director of the wealth management department at the Capital Asset Management company, pointed out. Further market developments will depend on how the memorandum is implemented and where talks between the US and Iran head. “It remains to be seen whether the United States actually lifts its naval blockade and allows Iran to export oil, particularly to China,” Klyshko added.
Veles Capital analyst Yelena Kozhukhova points out that the agreement made public does not take Israel’s position on Lebanon into account. But even if no incidents occur in the region and freedom of navigation is restored in the Strait of Hormuz, oil prices are unlikely to quickly return to the levels seen at the start of the conflict (below $70 per barrel).
According to Klyshko, a further decline in prices does not appear to be a stable trend because of a severe depletion of stocks. “A physical deficit persists as the United States and International Energy Agency countries have significantly drawn down reserves, while the summer season of high demand has only just begun,” Freedom Global analyst Vladimir Chernov explained. According to his estimates, oil prices will remain within the $80-88-per-barrel range in the coming weeks.
However, market participants remain cautious because the risk of a new round of escalation persists until a deal is formally signed and trust in statements by the parties has considerably declined over the course of the conflict, BCS stock market expert Andrey Smirnov told Vedomosti.
The majority of Moscow’s partners have requested increased supplies of nitrogen and phosphate fertilizers, Russian Agriculture Minister Oksana Lut told Izvestia. Moscow is urging partners to shift to three-year contracts, as experts believe the move would stabilize the global market and strengthen Russia’s influence.
Brazil, India and China are the main buyers of Russian fertilizers but demand is growing in African countries as well. The United States and the European Union are also unable to abandon Russian exports.
“Supply shortages in recent months accounted for around one-third of total global trade in mineral fertilizers. This applies to basic fertilizers such as nitrogen and phosphate products and complex fertilizers. A major crisis has affected sulfur supplies, which are crucial for the production of phosphate fertilizers. Volumes have plummeted by 46%, leading to a sharp rise in prices and physical shortages,” Konstantin Kuguchin, economist and lecturer at Moscow State Institute of International Relations, said.
A shift to three-year contracts would mark a strategic move with several economic effects. “Russia would secure access to markets, reducing the risks of overproduction and logistics disruptions. Such contracts contribute to forming strong trade ties and increase Russia’s influence on the global fertilizer market. From the production standpoint, manufacturers would be able to make more accurate plans for capacity utilization, investment, and raw materials purchases,” Galina Platunina, deputy head of the Department of Digital Economy, Management and Business Technology at the Moscow Technical University of Communications and Informatics, stressed.
“In a situation where a food crisis has coincided with an energy one, it’s only logical for virtually all countries to show an interest in Russian fertilizer supplies, including both traditional and relatively new growing markets such as African countries. Despite all the challenges, Russia is capable of meeting both domestic and international demand,” Platunina believes.
The high level of US national debt and rising debt-servicing costs could make borrowing more expensive across the world, said experts interviewed by Vedomosti. The reason is that global central banks have to consider interest rate differences with the US alongside their domestic economic conditions.
High US interest rates are making dollar assets more attractive, which is affecting the monetary policy of other countries, Mikhail Gordiyenko, professor with the Department of Sustainable Development Finance at the Plekhanov Russian University of Economics, explained. If any other country in such a situation moves to sharply cut its key rate, it could trigger a weakening of its national currency, capital outflows, and a rise in imported inflation.
The mounting US debt and its servicing costs may impact the entire global economy, Yegor Susin, head of the Center for Market Strategies at Gazprombank, noted. “The dollar still dominates the global financial system. A large share of transactions, reserves, payments, investment and debts worldwide are denominated in dollars. This is why rising dollar interest rates and yields will affect other regions,” he emphasized.
Svetlana Frumina, head of the Department of Global Financial Markets and Financial Technology at the Plekhanov Russian University of Economics, added that “the US debt issue is gradually turning into a global factor of tighter financial conditions.”
The world’s leading rating agencies, such as S&P Global and Fitch, have already lowered the US credit rating from AAA to AA+, but most investors and countries continue to view US government bonds as reliable assets, while high interest rates make them even more attractive.
“The United States has the largest and most liquid government bond market in the world, and US Treasuries retain their status as a core reserve asset in the global financial system,” Nikolay Novik, deputy director of the Higher School of Economics’ Institute for Global Military Economics and Strategy, confirmed.
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