Hey. Coming to you from Colorado. We got snow. Finally. A couple things happened over the last few days and the Thanksgiving holidays. We’re going to start with Ukraine. All energy related. So, the Ukrainians obviously have been using heavier weapons and, bigger drones and rocket drones and naval drones to attack Russian energy assets across the length and width of all of western Russia. 

They’ve now done a couple of things that are not necessarily unprecedented, but added together are going to really challenge what’s going on in global energy markets. The first is the port of Novorossiysk. Now Novosibirsk is a major naval base and has been a major Russian loading facility for crude for some time. And over the weekend, the Ukrainians hit it again with some naval drones. 

But most notably, they hit something called a loading booey, which is exactly what it sounds like. It’s an offshore Bui that a tanker comes in, docks with, and then loads up with crude. But this time the, Bui doesn’t belong to the Russian government. It belongs to a group called the CPC, the Caspian Pipeline Consortium, which is a consortium of international companies that operates the Tengiz super field on the northeastern coast of the Caspian Sea. 

Tengiz Chevron was the original company that founded. This dates back to the Soviet periods. It was the first real foreign direct investment by Western companies, in the former Soviet Union. And eventually, Chevron became the functional operator, along with some Kazakh and some Russian companies. Anyway, CPC is responsible for about 75 to 80% of the total exports of Kazakh oil. 

But because the pipeline has to go through Russia, because the Russians were just dicks when all of this was being negotiated, the Russians throw a lot of crude in the pipeline as well, and sometimes even crowd out Kazakh crude. So the Ukrainians see it as a viable target. So, Tengiz, is a big deal. The CPC consortium is a big deal, but overseas is really where it’s at, because that’s not just an export point for Kazakh crude, but a lot of Russian crude as well. 

Now it’s under regular direct attack as specifically CPC, aspects. So you’re talking about, just from CPC, roughly 1.4 million barrels a day is under a degree of threat, and then another million barrels a day of purely Russian crude. So if the Ukrainians can keep this up and it is kind of the next target in the crosshairs, that is a significant reduction in potential flows. 

That’s part one. Part two is the Ukrainians deliberately, again, using naval drones, went after a pair of shadow fleet vessels in the Black Sea that were coming in from Istanbul. They were empty at the time, which is probably the only reason that the Europeans haven’t screamed bloody murder, because if you actually had an oil spill in the Black Sea, all of it has to flow through downtown Istanbul on the way to the Mediterranean. 

It would be a mess. But we now have the Ukrainians actively, deliberately targeting the shadow fleet, which basically means that the between targeting overseas on the front end in the Shadow fleet, on the back end, the entire Black Sea is now a no go zone, for the Shadow fleet tankers and for Russian oil experts in general. 

And we’re going to lose somewhere between 2 and 3 million barrels a day of flow just from that. That is a big deal in of of itself. But it also brings up the next stage of this Russian shadow fleet. Tankers only depart from three locations near, Saint Petersburg, on the Baltic, near and over a sea on the black, andnear Vladivostok, on the, the Pacific coast. 

One of those is now functionally shut off. The next one to go is going to be the Baltic. And the question will be whether the Ukrainians do that themselves. It is further away it would be harder to do, or whether the Europeans assist, because every tanker that flows out of the Saint Petersburg region has to go through EU and NATO members Estonia, Latvia, Lithuania, Finland, Sweden, Poland and Denmark, as well as Norway and Germany. 

So, you know, if there’s any one of those countries that decides to assist the Ukrainians in any meaningful way, whether it’s time on target information, intelligence, information targeting, going after themselves, allowing the Ukrainians to fly through the airspace or dock at their ports, whatever it happens to be, then you’re talking about roughly two thirds to three quarters of Russian oil exports from a pre war point of view being gone. 

And we’re now in a position where we can talk about what that’s going to look like in just a few months. Now the global energy supply is at the moment in oversupply. So losing one to maybe even 3 million barrels a day of Russian crude is not something that’s going to break anybody. Except for Russia, of course. 

But once you start talking about the black and the Baltic being off at the same time, we’re already up against the upper limit there of how much flow you could probably remove from global systems without everybody, like having a CS. You combine that with more and more targeting of the shadow fleet itself so that there just aren’t tankers available. 

And then we get into some really interesting positions. It looks like calendar year 2026 is going to start off with a bang, and I am here for it.

Hey, all. Peter Zeihan here. Coming to you from Colorado. Today we’re going to talk about a new drone technology that you’re probably going to be hearing about pretty soon. It’s called the octopus. It’s a Ukrainian design and unique among drones to this point. It is designed to hunt drones. So the situation that Ukrainians are in is they basically face three kinds of threats from the Russians when it comes to the air. 

Threat number one, our missiles, primarily a mix of hypersonic and, ballistic, which can be and are intercepted by a variety of air defense systems up to and including the American Patriots. And it’s not that the Russians don’t know how to make good missiles or anything, but what we’ve seen in the last three years that even their best ones, even their supersonic ones, can be taken down by a patriot. 

Pretty reliably. It doesn’t mean that anyone should rest on their laurels or anything, but that threat has, to a degree, been addressed. The second category are something called glide bombs, and they’re just what they sound like. A Russian jet drops the bomb from over here. It is. Has a thin kid on it, and the bomb glides upwards of 15 to 20 miles. 

So that you can’t really intercept. It doesn’t have a lot of guidance, if any, on it. So from the thins, and the only way you can stop those is to push back the envelope where the jets are dropping from. In this, the Ukrainians have had some degree of success. They’ve got their own jets. 

They’re getting F-16s from a number of NATO countries. And every once in a while, they regularly put their patriots on the front line to shoot down jets that come too close. It’s not a perfect system, but it is something that’s been partially addressed. And the third and most problematic category are cheap mass produced drones, specifically the Shaheds that are, designed in Iran used to all be made in Iran and shipped to Russia. 

Now the Russians have their own assembly and manufacturing capacity. Out further east, away from the front. Shahed cost somewhere between. Oh, based on the model and the number that they’re making $20,000 to $90,000, for the most part. And the problem with your Shahed. Well, pros and cons. First, the cons of the Shahed, there’s so cheap that they really don’t have much for optics or sensors or compute power at all. 

So what happens is the Russians program in specific coordinates, and the head flies there and crashes at those coordinates. So, whenever you see that the Russians have hit a school or a mall or a hospital or an apartment complex, they actually programed in those specific coordinates. So every strike is a war crime. Second, because they’re so cheap, the Russians can field at first a few than a few dozen, and now more recently, a few hundred. 

And the understanding is that by the end of this year, the Russians will be producing these things in the, the thousands of units per month. And so very soon, the Ukrainians are going to be dealing with thousands of these at a time in a single assault. And defending against that is almost impossible with all the technologies we have right now. 

Because if you’re going to use an anti-missile missile that is expensive, each missile costs significantly more than the Shahed does, and you now need hundreds, if not thousands of them. And most countries don’t even have that kind of volume in their arsenal. So that leaves you with things like machine guns. And while there are a couple things out there that work great, their point defense, and they can’t roam and hunt. 

So what the Ukrainians are doing with the octopus drones is an attempt to build a small, cheap drone that can go out as the Shaheds are on their way in and basically work through the way through formation. Pick them off one at a time. And the idea is that the Shaheds, cost more than the defensive drones, than the octopus. 

That’s the theory will work. We’ll see. The Ukrainians, because this is an operational weapons system, are not providing really much of anything in terms of details as to the range and the cost and all that good stuff, but a few things that we know have to be true. Number one, unlike the Shaheds, which don’t have really a processing memory at all, you’re going to need both a GPU and a microprocessor in the octopus drones, because they have to be able to perceive and hunt. 

You need the GPU for decision making capacity. You need the microcontroller for low latency. Those two chips together probably cost, call it 40 bucks for the GPU and probably another 20 bucks for the microprocessor. These are things that Shaheds don’t have because they’re stupid drones. 

That’s still not very expensive. And if you’re talking about something with a relatively limited reach that can hunt something that’s flying 120 miles an hour, it’s theoretically possible that you could drop the cost of that to below the Shahed, because a Shahed has to fly several hundred miles before it gets to its target. 

So a very different profile for the type of weapon system it has. Also, if you have a decent yes, we’re talking 14 nanometer don’t get crazy decent ish GPU along with some, some Dram memory, for probably Nand memory. Ukraines. Yeah, let’s go with Nand difference. Dram is faster and can store more, but it loses all of its memory when it’s powered down. 

Nand doesn’t store nearly as much. It’s not nearly as quick, but you can leave it in the on the shelf for a couple of months, and nothing’s going to happen to the data on it anyway. You throw a bunch of these against a fleet of incoming  Shahed, and if they miss the first one, they just go for the second one and so on.  

Anyway, according to the Ukrainians, these are already in mass production, producing over a thousand units, a month. And if this is true and if it works, it is going to change the face of warfare in the drone age. At this point, drones fall into two categories. Those that can self target kind of like the  Shahed. 

But because GPUs are very subject to vibration and heat and moisture, they’re not hard. You can’t get a good GPU in it to do any real decision making. Just basically they get to the point of arrival. They look around the first thing that they see that hits the target set, they go for that. That’s it. That’s as smart as it gets. 

Or you have a live link back to a controller or a data center, and someone else is making the decision and, programing it step by step. In the first one, you don’t get a lot of accuracy. In the second one, you might get great accuracy, but it’s very easy to jam. So to this point, aside from shooting it down, the only defenses that the Ukrainians or anyone has is to be really good with jammers. And the Ukrainian jammers are now the best in the world, far better than American jammers. 

If you can have a counter drone drone that’s inexpensive, that changes the math. Again, provides an entirely new type of defense that countries can use to protect against drone onslaughts, and probably changes the math of these cheap, mass produced drones that the Russians and the Iranians are doing. 

Anyway. We’re going to know before the end of the year whether this thing works or not. And then we start an entirely new sort of drone race with a fundamentally new type of defense.