Ukraine Strikes Hit Baltic Export Facilities

Drone firing a missile

The global energy trade has been taking hit after hit, and things might be getting worse. Ukraine launched a large drone attack on oil export facilities in the Baltic, proving they can disrupt Russian exports.

With the Persian Gulf effectively offline, losing Russian oil would be devastating to the global markets. Drone warfare continues to evolve and reshape the way these conflicts unfold, especially when targeting energy infrastructure.

I would expect Ukraine to continue these strikes, knocking out a large portion of Russian export capacity. Which means the global energy crisis could get much worse, very soon.

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Transcript

Hey all, Peter Zeihan here. Coming to you from Colorado. More news, not Iran related from Sunday, the Ukrainians launched a fleet of drones into Leningrad province. That’s where Saint Petersburg is targeting. Specifically the pro-Morsi and the use Luga oil loading facilities. Now, combined, those two facilities can handle about 1.7 million barrels of crude a day of exports and another 300,000 barrels per day of refined oil products, primarily diesel. There are multiple reports of fires throughout the loading and tanker areas on the port specifically, and at this point, about 24 hours after the attacks happened, that port remains offline. Now, this is significant for two very, very, very big reasons. Number one, the Persian Gulf is offline. It’s probably not coming back. That’s 20 million barrels per day that we’re probably just not going to see again. 

And the world has yet to accept that is where this is ultimately going to lead. Second, there are really only three major sources of crude for the global economy. One is the Persian Gulf. One is North America, specifically the American shale sector, primarily in Texas. New Mexico, Colorado, Oklahoma and North Dakota. That one’s fine. And the third one is the former Soviet Union. 

Most notably Russia. Now, Russia has three major ways to ship its crude out. One goes to the Black Sea. And those have been under persistent attacks by the Ukrainians for a couple of years now. One goes out to the Far East, near the city of Vladivostok. Those are well out of range of anything the Ukrainians can do. 

And the third one is this one here in the Baltic Sea with Paramores can use luga. The thing is, these have typically been just out of range for Ukrainian attacks as a rule. And there’s this is a rule made to be broken. Any infrastructure that is within about 600 miles of a hostile actor is now completely vulnerable to ongoing cheap drone attacks like the shitheads at the Iranians are using against the United States in the Gulf right now. 

Like the Russians have been using against Ukraine since the beginning of the war, and now the Ukrainians have joined the club and they’re threatening, the Leningrad region. But the Leningrad region is about 700 miles away. So not only have the Ukrainians developed a new battle platform with better range, they’ve been able to generate enough drones to throw a volley of 60 of them at these two ports. 

To the point that they are able to shut down one of the largest facilities that the Russians have. So we now need to pencil in, in the not too distant future that, not only are we going to use the Gulf, not only are we going to use the Black Sea, we are also going to lose the crude that’s coming out of the Saint Petersburg region as well. 

And from the Russian point of view, that adds up to about another 4 million barrels a day, probably. There’s a limited degree for the Russians to shift crude around, but really not all that much. The Ukrainians have now demonstrated that this is, if not easy for them, well within their capabilities. And we should see attack after attack after attack in the days and weeks to come. 

The Baltics Ditch Russia for European Integration

*This video was recorded during my backpacking trip through Yosemite in the end of July.

The Baltic states – Estonia, Latvia and Lithuania – are taking one step closer to the Europeans with their upcoming electrical system swap. This switch from Russian to European electrical standards marks a significant shift for these nations.

Since the Baltic states industrialized under Soviet rule, their electrical systems have long been geared to Russian technic norms. While other similar countries transferred over to the European standard, the Baltic transition was made slower due to the geography and proximity to Kaliningrad. This was amplified by demographic issues and slow growth that have plagued these countries.

The electrical switch is a critical step in integrating the Baltic states into the broader European system and it reflects the ongoing progress these countries are making.

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Transcript

Hey, everybody. Peter Zeihan here, coming to you from the Hoover Wilderness. This is the northwest shoulder of Slide Mountain. I’m in the part where Yosemite merges into the Hoover, and there are so many things to look at that they haven’t even bothered naming most of them. Anyway, taking an entry from the Ask Peter forum today, specifically asking for comment about the effort in the Baltic republics.

That’s Estonia, Latvia, and Lithuania, the three Central European states on the Baltic Sea, who are switching their electrical system over from Russian standards to European standards.

This has been a long time coming. They’re actually already using European generation assets, but they do use a different frequency. If you remember back to the bad old days of the Cold War, everyone was convinced for a while, pre-1985 roughly, that they needed to control their own manufacturing system. So we all had our own electrical networks—the Soviets had theirs, the Americans had theirs, the Brits had theirs, mainland Europe had theirs, Australia, and New Zealand had theirs, blah blah blah. Wow. It was really annoying. Anyway, now that the Baltic states are no longer part of the Cold War and no longer part of the Soviet Union, they are finally switching over.

While the connections are already in place to draw power from the European space, this will be changing the frequency as well. So basically, everything’s going to go down one day next year, I think in March, and then it’s going to come back up and they’ll feel a little bit more European.

This is one of the many problems that the Balts and really all of the Central Europeans have had in adapting from Soviet life to European life. Most of these countries had their first taste of industrialization under Soviet rule in some way. And don’t make that think that they’re laggards because, you know, Sweden had their first taste of real industrialization in the 1940s and 50s as well. This is just when it happened for many, many, many people. So their systems were designed to work in a different world, and moving over bit by bit can be done, but it takes time and it takes resources.

In the case of the Balts, they’re definitely the laggards in this. Poland, the Czech Republic, Hungary, and Slovakia went over very, very early because they have a lot more physical connections to Europe. For example, you can basically walk from any part of Germany to any part of Poland without a problem. The Balts are hanging off the northern end of Poland. And there’s a little problem in this little enclave called Kaliningrad, which inhibits direct connections between the greater EU and the Balts. Basically, you’ve got this little pocket of Russian territory that’s on the Baltic Sea.

Kind of reminds me of, I don’t know, Washington, DC, without the governance. You get all the dirt, all the traffic, all the corruption, and all the bad weather, but none of the power. Well, that’s kind of what it feels like to me anyway. Rooting around that has always been difficult because there’s a security issue.

There’s something called the, let’s see, I’m going to butcher this name, Suwałki Gap, which is the thin layer of territory that connects a sliver of Poland to a sliver of Lithuania. They’re building out infrastructure to make that a more viable connection, but it takes time. And remember that the Balts are called the tiny Baltic republics for a reason.

These are not large states. And when they got into the European Union, and they got into the Schengen zone, and they got into the free movement treaty, a lot of people who were in their 30s or younger left. So the total population for all three Baltic states combined is only about 8 million. I mean, geography’s a bitch. If you’ve got this kind of weak connection and then that kind of population density, there’s only so fast that you can go without a lot of outside help.

Now, the European Union, with development funds, has been paying for some of this, but ultimately the Balts have to dig deep. There’s also been talk about the Swedes and the Finns doing more, like maybe having a bridge or a tunnel from Finland to Estonia. But you should put that out of your mind right now because Finland only has like 5 or 6 million people, so it would never be viable.

Anyway, this is one of the many, many reasons why back in the day, in the 20s, I was like, if you’re going to expand NATO, great. Poland, obviously; Hungary, obviously; Romania, obviously. But the Balts? Should we really be extending the defense guarantee to countries that couldn’t be defended? But that was 20 years ago. And in that time, the Balts and the Europeans have come a long way in building connections among them.

And more importantly, in Ukraine, where we’ve seen very, very, very clearly that the Russian army is not all that, and they’re burning through their men and their equipment at a rate that they just can’t replace. So while it’s still a meaningful conversation about defense of the Balts, because they are very exposed and at the very end of a very long chain of logistics, it’s no longer silly to have that conversation.

So I see this electrical switchover as another small step in a multi-decade process to make the Balts part of the free world. So far, so good.