April 10th, 2025

Diplomacy - Technical talks on Rare earths in Washington tomorrow 

- Zelenskky: Ukraine to buy $30-50 billion in weapons

Combat Ops - Incursions in Kursk region squeezed

Economics - Russia spot oil prices below $50

Weather

Kharkiv

44 and cloudy, gusting to 20. Mostly cloudy for the next week. Daily lows in the 30s, daily highs in the upper 40s to low 50s. Winds variable, 5-10kts.

Melitopol

45 and cloudy, gusting over 20. Cloudy through the weekend, rain Friday and Saturday, starting to clear Sunday night. Daily lows low 30s through the weekend, daily high in the mid 40s,. Winds variable, 10-15kts.

Kyiv

32 and cloudy, windchill 20, gusting to 35. Partly to mostly cloudy for the next week. Daily lows through Sunday in the high 20s to low 30s, highs will be in the mid to 40s except Sunday, in the 50s. Winds variable, 5-10kts.

Politics and Diplomacy

Deputy PM Stefanishyna announced that technical discussions will be held between the US and Ukraine concerning rare earths, to start tomorrow in Washington.

"Technical consultations between the teams of the ministries of justice and economy will be held tomorrow in Washington. And I am not able to disclose any details, because the meeting will take place only tomorrow. I will be able to comment tomorrow.”

"I can really confirm that nothing in the agreement can be discussed with Ukraine in a way that would undermine Ukraine's existing obligations, including financial ones - within the Ukraine facility, macro-financial assistance, cooperation with the IMF. This cannot be the subject of any negotiation format. And this means that the appropriate adjustments must be made to the format of the agreement later.”

President Zelenskyy announced that Ukraine prepared to buy a major weapons palace form the US, on the order of $30 - $50 billion in size.

"Regarding the additional package, we want and we are ready, and we have transferred to the American side a large package that we want to buy. Buy in one form or another. This is our format, how we will pay for it. And we did not ask for the future package for free. We are counting on it even as a security guarantee.” 

"And then, please, there is an agreement, we will give the money, whether you want it to this fund or if you want, we will pay you directly. We don't care.”

"This is protection, it will help us after the end of the war, it is a guarantee of security, that Ukraine is covered by air defense. There are many different formats and tools that we are ready for. We were ready to find both 30 and 50 billion for the appropriate package.”

The focus will reportedly be on air defense but will incudes a wide range of weapons.

Ground Operations

KURSK SALIENT and SUMY FRONT

Russian forces continue to squeeze the small pockets of Ukrainian forces inside Russia, with the largest pocket being now contained north and west of the small town of Goral; Ukrainian forces are now strung out along the border in an area at most a mile wide and a couple of miles long. The terrain is all manicured farmland and open terrain on each side of the border fence, leaving little terrain for cover.

Inside Ukraine Russian forces made some small gains south of Basivka and recon elements may have reached the vicinity of Loknya, but there is only so much the Russian cans do without large-scale reinforcements, and there are no indications of any forces moving into the area. In 2022 Russian forces had a great deal of trouble moving through this area and getting through forest areas proved difficult. Short of a major investment in assets Russian forces are unlikely to reach Sumy from this avenue of approach.

Fighting continues north-west of Belgorod in and around the towns of Demidovka and additional Russian forces are now deployed north and south of Demidovka and are attacking on the Ukraine left and right flanks. But there were no confirmed changes it the front line.

NORTH OF KHARKIV

Fighting continues in Vovchansk but there were no confirmed changes to the front lines.

NORTH OF THE DONETS RIVER

Well north of Kupyanske Russian forces made gains along the west bank of the Oskil River, near the Russian border. More Russian attacks continue in the vicinity if Kupaynske, with Russian forces gaining ground north of Dvorichna.

South of Kupyanske, east and north of Borova, fighting continues but neither side made any gains. There are unconfirmed reports of Russian forces attemtoign to set up a pontoon bridge over the Oskil in the area immediately north of Senkove.

Fighting continues west of Terny and the Ukrainian general staff noted multiple attacks by Russian forces west and north-west of Terny and unconfirmed reports suggest Russian forces are driving westward from Katerynivka, may be a mile-and-a-half west of that town, and closing on the small town of Rikodub.

BAKHMUT

In the Bakhmut area: to the north-east Russian forces may have gained ground in several different spots east of Siversk, to include south of Bilohorivka, a key spot because of the high terrain around Bilohorivka.

In Chasiv Yar, west of Bakhmut, reporting is contradictory, but some reporting strongly suggest that the center of that town is now controlled by the Russians, but this has not been confirmed. 

South of Bakhmut, in the Toretsk area, Russian forces had gains inside the town, and west and south-west of the town. Ukrainian forces had gains north of the town.’

DONETSK CITY

The Pokrovsk salient remains very active; Ukrainian forces have made some gains in Kotlyne - west of Pokrovsk, and Russian forces were confirmed to have made gains in the town of Tarasivka - east of Pokrovsk, just east of the large bend in the T0504 roadway.

Russian gains were also noted both to the south-west and to the east of Pokrovsk amidst the reports of Russian probes and attacks in 15 other towns along the perimeter of the salient. In short, the Russians continue the constant grind. However, at the same time, reporting - again unconfirmed - suggests additional Russian forces are being moved forward.

Just south of the Pokrovsk salient Ukrainian continue to fight to hold their positions and there were no confirmed changes to the front lines in this area. However, unconfirmed reports suggest that the Russians have pressed through Kostyantynopil, and have also taken Rozlyv, and are now focusing on Bahatyr.

Further south, north-west of Velyka Novosilke, Russian forces continue to push to the north-west, but there were no confirmed gains. Other reporting suggests some small gains may have been made small gains to the northwest in multiple points along the line between Vesele and Vilne Pole, but these are not confirmed.

SOUTHERN UKRAINE

At the western end of the line, Russian forces continue to press northward and are confirmed to have pressed into central Shcherbaky; fighting continues along the rest of the line in this area. Anecdotal reporting continues to claim that additional Russian forces are being moved into this area, but these reports have not been confirmed.

Unconfirmed reporting notes that both the Russians and Ukrainians are attempting to land riding parties on the opposite bank of the river,a nd to possibly set up small observation posts, but neither has yet succeeded.

Ukraine’s Southern Command notes that Russian forces are continuing drone and artillery strikes across the river.

Air Operations

During the night of April 9th Russian forces launched at least 1 missile (type unknown) and 145 x Shahed drones into Ukrainian airspace. The UAF claimed it shot down 85 drones, and 49 other drones were “lost” (defeated by EW). Damage was reported in at a warehouse in Dnipro, Kharkiv, Krmatorsk and Kyiv; the missile hit civilian infrastructure in Dnipro, killing one man.

During the night of April 8th Russian forces launched 55 x Shahed drones into Ukrainian airspace. The UAF claimed it shot down 32 drones, and 8 other drones were “lost” (defeated by EW). Damage was reported in Dnipropetrovsk, Donetsk, Kharkiv and Sumy oblasts.

During the night of April 8th Ukrainian forces launched more than 200 drones into Russian airspace. The RuAF claimed it shot down or otherwise defeated 200 drones as well as 9 x JDAM. Damage was reported to civilian infrastructure in Orenburg and Rostov oblasts.

Economic Reporting

Feb22   Jun10-22Jun8-23 Jun7 Jan8 Feb7 Mar4 Apr8 Apr9 Apr10

Brent      94.71      120.90    75.58      80.06 76.69 74.89 70.00 64.80 60.61 62.89

WTI     92.10    119.50  71.29      75.81 73.94 71.17 66.97 61.37 57.36 59.74

NG       3.97        8.41      2.15      2.82 3.66 3.37 4.44 3.69 3.50 3.64

Wheat     8.52       10.71    6.17       6.40 5.37 5.86 5.37 5.38 5.39 5.38

Ruble     85        58.48    82.59      88.77 105.18 96.88 89.50 86.24 86.07 84.00

Hryvnia Pre Oct 2023 - 36.4 42.33 41.46 41.40 41.18 41.32 41.43

Urals 56.56    67.61 71.76 68.32 65.49 52.76 50.09 47.54

ESPO 78.19 UNK 71.50 70 70 53.19

Sokol 72.79 70.92 67.20 61.42 58.08 61.67

The Urals spot price in Primorsk today, the spot price for ESPO is as of this morning and is in contrast to long-term contract prices.

 

Thoughts 

The 2019 RAND study ("Extending Russia”) noted that the most effective means to contain Russia was to keep energy prices down and thus keep the Russian government cash poor. As noted yesterday, Russia’s federal budget was drafted based on an average oil price for 2025 of $70 dollars. Over the past decade Russia’s oil revenue has accounted for anywhere from 30 and 50% of the federal budget, but was expected to only account for 27% in 2025 - based on prices above $70 per barrel.

Russia’s federal budget for 2025 was expected to reach 41.5 trillion rubles ($494 billion at today’s exchange rate). This means that $133 billion in revenue (27%, 11.2 trillion rubles) was to come from oil and gas sales. $133 billion equates to 1.9 billion barrels of oil at $70 barrel. However, at $50 / barrel that would mean 2.66 billion barrels of oil at yearly rate, or for the next 9 months, 2 billion barrels at $50 per barrel, which would push Russia to sell roughly 60 million additional barrels of oil per month to make up the difference, or 2 million barrels per day. 

Russia is currently producing about 9.8 million barrels per day. 

At $70 / barrel that equates to $686 million per day, or 193 days of production to meet budgetary demands.

At $50 / barrel that equates to $490 million per day, or 270 days of production to meet budgetary demands.

Driving down the cost of energy, whether by increasing oil and gas production, may be the one thing that convinces Putin to come to the negotiating table…Maybe…

v/r pete