On 12 June, Russian President Vladimir Putin initiated a new phase of government discussions on the State Rearmament Program for 2027–2036, with the agenda focused on advancing air defense, space systems, drone capabilities, and robotic technologies, according to a 13 June report from the Institute for the Study of War (ISW). The overhaul is part of Russia’s preparation for a prolonged war with Ukraine and potential future conflict with NATO, the think tank says.

During the meeting, Putin claimed that Russia’s air defense systems had ostensibly intercepted over 80,000 aerial targets since February 2022. Of these, 7,500 were described as operational-tactical and cruise missiles, which Putin said were “almost all” Western-made. He argued that Russia’s war in Ukraine demonstrated the need for a “universal air defense system” that can counter all types of projectiles.

Focus on AI, space capabilities, real-time command systems, naval rebuilding

Putin also emphasized the necessity for advanced digital technologies and artificial intelligence (AI) to be deeply embedded in Russian military systems. He outlined goals to develop a fleet of new, unspecified spacecraft aimed at improving reconnaissance and enabling real-time command and control capabilities. The Kremlin is also investing in the modernization of the Russian Navy and seeking to rebuild the Black Sea Fleet, which has suffered heavy losses due to Ukrainian attacks.

“Putin’s statements regarding the need for enhanced Russian air defense systems are likely in part a response to Ukraine’s ‘Operation Spider Web,’ in which Ukrainian forces demonstrated an ability to achieve operational surprise and launch drones against airbases in Russia’s deep rear, highlighting the inability of air defenses in these areas to repel short-range Ukrainian first-person view (FPV) drone strikes,” ISW wrote.

Oil revenues may factor into strategy

Despite its ambitions, Russia’s ability to finance the vast rearmament remains unclear, ISW says. According to the think tank, the country’s defense industrial base (DIB) had already struggled with fulfilling both domestic and foreign military contracts before Western sanctions were imposed in 2022 in response to the full-scale invasion of Ukraine.

 ISW suggests that rising oil prices—partly triggered by Israeli strikes against Iran—could help Russia finance some of its military goals if those prices remain elevated over the medium- to long-term.

Israel’s attack on Iran may have revived Moscow’s oil revenues for war

The think tank concludes that the Kremlin is likely using battlefield lessons from its war in Ukraine to “inform adaptations of Russia’s military and preparing Russia’s DIB for a protracted war against Ukraine and a potential confrontation with NATO.”

Oil prices surged by up to 14% following Israeli military strikes on Iranian targets, Bloomberg reported on 13 June. The escalation immediately rattled global energy markets, with crude benchmarks jumping sharply amid fears of wider conflict in the Persian Gulf.

Crude markets react to military escalation in the Middle East

According to Bloomberg, West Texas Intermediate (WTI) crude topped $77 per barrel at one stage—the biggest intraday gain since May 2020—before easing to around $73. European natural gas also rallied, while gold approached record highs as investors sought safe-haven assets.

Israel targets Iranian nuclear and missile facilities

Last night, Israel struck multiple locations across Iran, including the Natanz nuclear site and facilities in Tabriz. Israeli Prime Minister Benjamin Netanyahu said the strikes were aimed at neutralizing Iran’s nuclear and ballistic missile capabilities and confirmed that the campaign would continue. Hours later, the Israel Defense Forces stated that Iran responded with a wave of over 100 drones, and further missile retaliation was anticipated.

OPEC+ and IEA prepare for potential supply crisis

Analysts at SEB AB told Bloomberg that markets are not factoring in deep damage to Iranian infrastructure or full disruption through Hormuz. Still, the International Energy Agency has confirmed its readiness to release emergency reserves if needed. Meanwhile, OPEC+—with most spare capacity located in the Gulf—could raise production to stabilize prices, should the situation deteriorate further.

Russia’s reliance on oil and gas exports

In 2024, Russia’s oil and gas sector accounted for about 30 % of its federal budget revenue. Meanwhile, Russia’s military spending in 2025 is projected at 7.7 % of GDP and 12% increase against 2024—reflecting a highly militarized economy prioritizing arms and war-related production.

In an interview published on 12 June by German outlet Bild, Ukrainian President Volodymyr Zelenskyy rejected reports of Russia’s large advances. He said the idea that Russia is winning the war is “a Russian narrative” and insisted Ukrainian forces have been repelling a renewed Russian push for nearly three weeks. The Russians are“not that successful, to say the least,” he added.

Zelenskyy dismissed the idea that recent drone strikes—up to 500 in number—allegedly are revenge for a Ukrainian operation Spiderweb that targeted Russian strategic bombers. He said Russia’s President Vladimir Putin is someone “looking for reasons to attack Ukraine. He simply does not want to end the war.”

Zelenskyy noted that the Russian population still supports Putin’s radical policies. “But he has to maintain the fire of information and hate,” Zelenskyy said. He argued that Putin frames his attacks as revenge to keep that support alive.

Russia’s two goals for fake diplomacy: avoid new sanctions and isolate Ukraine

According to Zelenskyy, the real reason for Moscow participation in Trump’s push for peace negotiations is to avoid new sanctions. He stated,

“It’s important for them to show Trump there’s a diplomatic bridge between Ukraine and Russia,” so that Russia can argue, “We are talking to each other! If sanctions are introduced, there will be no more talks.” He firmly added, Putin does not want peace.

Putin “gives the finger” to the entire world, Zelenskyy says after Trump’s call with Russian president

The second goal, Zelenskyy warned, is to sideline Europe and the US in talks and isolate Ukraine.

“A long war without partner support [for Ukraine]—for Putin that would be the perfect scenario,” he said. “A long war with partners and sanctions—he can’t survive that.”

Zelenskyy said he believes the former US president understands Russia’s dishonesty.

“President Trump sees that the Russian side is not completely open and honest about the war,” Zelenskyy told Bild. “I think that Russia is simply lying to Trump.”

Russia simply lying to Trump, Zelenskyy says

Zelenskyy calls for more sanctions against Russia

After months of military escalation, Zelenskyy emphasized the urgency of the new US sanctions package Trump has always threatened but has not yet implemented.

“Trump must introduce the sanctions so that Putin immediately says: ‘Let’s talk about ending the war,’” he said.

Zelenskyy acknowledged criticism of sanctions but argued delays gave Putin time to adjust. “This allowed him to adapt,” Zelenskyy said, adding that the economy and especially the defense industry had managed to recover.

Peace talks or war? Russia may choose both to avoid Western sanctions

Ukrainian President Volodymyr Zelenskyy said Russia is deceiving Donald Trump and warned that the US president’s response to those lies could determine the future of the Russo-Ukrainian war.

In an interview published by Politico on 12 June, Zelenskyy stated:

“Russia is simply lying to Trump,” he said, adding that “most heads of state and government share my opinion,” expressing hope that the US understands the extent of Russian disinformation.

Zelenskyy said the leverage to end the war rests with Trump, noting that “Putin understands nothing but strength, and America has that strength.” He also emphasized that the effectiveness of sanctions and the speed of decision-making “depends on” Trump.

Trump diplomacy’s new low: Rubio congratulates Russians on Russia Day

Ongoing war, weak peace efforts, lack of sanctions

Recent low-level Russia-Ukraine talks in Istanbul have made little progress, while Russia continues its escalated attacks on Ukraine. Zelenskyy said Trump expressed doubts about Moscow’s sincerity after a recent phone call with Putin. Trump bizarrely compared Russia and Ukraine to two squabbling children and said the deadline for more sanctions exists “in his brain.”

When asked if Trump’s opinions shift depending on whom he speaks with, Zelenskyy answered, “I don’t know,” but reiterated: “Russia is not sincere.”

Zelenskyy said Russia’s ongoing offensive is “not very successful,” adding that the Kremlin has failed to achieve its goals. He claimed Moscow is trying to buy time while its economy suffers. He believes stronger sanctions could further deplete Russia’s military capabilities and reduce attacks on Ukraine.

US repeats Ukraine-Russia talks mantra despite Russia’s rejection of ceasefires

Western support critical to Ukraine’s survival

According to Zelenskyy, Ukraine’s survival hinges on continued support from Western nations. He warned that an American withdrawal would be “a perfect scenario” for Putin and could hand victory to Russia.

Zelenskyy acknowledged personal doubt, referencing Winston Churchill’s struggles during World War II.

“I have no fewer doubts than anyone else in Ukraine. But the difference is that I am the president,” he said. “So until the end of the war, I will never show any moments of weakness. And I will never share my dark days with anyone.”

Putin “gives the finger” to the entire world, Zelenskyy says after Trump’s call with Russian president

Today, there is interesting news from the Middle East.

Here, OPEC has made a decisive move to punish member states violating production quotas by ramping up output and pushing oil prices to new lows. As the global markets react, the shockwaves hit Russia the hardest, with its economy, already strangled by sanctions and inflation, now gasping for air under the weight of collapsing revenues and shrinking influence within the oil cartel.

OPEC+ raises output, sending oil prices tumbling

Recently, OPEC+ announced plans for a significant increase in oil production for July, adding 411,000 barrels per day. This is the third consecutive monthly hike, and the move aims to regain market share, and discipline overproducing members like Russia, Iraq, and Kazakhstan. Despite the risk of oversupply, the group, led by Saudi Arabia, is prioritizing volume over price to reassert its influence in the global oil market, building on its previous decision not to increase prices.

The immediate effect of this decision has been a notable decline in oil prices. Brent Crude, sourced from the North Sea, has fallen to approximately 65 dollars per barrel, while the West Texas Intermediate produced in the United States is trading around 63 dollars, marking the lowest levels since early 2021. Analysts anticipate that this trend may continue, with forecasts suggesting that Brent Crude could hold the same reduced price for the entire year. Goldman Sachs projects that oil prices might average 60 dollars per barrel this year and potentially dip to 56 dollars in 2026. In more extreme scenarios, where global economic conditions worsen significantly, prices could even fall below 50 dollars per barrel.

Russian crude slides below budgeted threshold

For Russia, these developments pose significant challenges. As of early June 2025, the price of Russian Urals crude oil has fallen below 50 dollars per barrel, marking its lowest level since June 2023. Specifically, in April, Urals crude was priced at around 47.50 dollars. This is extremely below the 70-dollar benchmark used in the initial Russian budget planning for the year. It is estimated that each 10-dollar drop in oil prices costs Russia approximately 17 billion dollars annually. The resulting revenue gap of around 40 billion dollars is expected to widen the deficit to 10% of the projected Russian annual budget of approximately 415 billion dollars.

Gulf states challenge Russia in Asia

Moreover, Russia’s position in the Asian oil market is under threat. While Russia has been exporting discounted oil to countries like India and China, with the massive increase in production, other OPEC+ members are also targeting these markets, increasing competition and potentially driving prices even lower, while at the same time offering better quality oil compared to the Russians. This increased competition in Asia could erode Russia’s market share and further impact its oil revenues.

Russia’s influence within OPEC+ declines

Additionally, Russia’s influence within OPEC+ appears to be waning. The recent production increases have been driven primarily by Saudi Arabia, with Russia reportedly unhappy about these hikes. This shift suggests that Gulf states are increasingly dictating policy according to their own interests, potentially sidelining Russia in the decision-making process.

Sanctions, tariffs, and strikes cripple Moscow’s oil prospects

Russia is unlikely to benefit from increased production due to several factors. Tougher sanctions that get enforced more and more vigorously, price caps aimed to cripple the Russian oil revenue, and damaged refining capabilities, courtesy of Ukrainian precision strikes, limit Russia’s ability to capitalize on higher output. Furthermore, the production cost of Urals crude is higher compared to Brent Crude, as well as Brent having higher quality and being easier to refine into gasoline and diesel. There is also constant uncertainty about new sanctions coming soon, including a 500% secondary tariff being actively discussed in the US Senate, which would target countries buying oil and other natural resources from Russia. All this makes Russian oil less competitive in the global market and ruins all plans that have been made for the Russian budget, which is already under enough stress due to the ongoing war efforts in Ukraine.

In our regular frontline report, we pair up with the military blogger Reporting from Ukraine to keep you informed about what is happening on the battlefield in the Russo-Ukrainian war.

Lithuania’s Foreign Minister Kęstutis Budrys stated during a 9 June briefing in Kyiv that existing EU sanctions cover just 40% of Russia’s capabilities, calling for significantly stronger measures and expanded coordination with the United States.

Current sanctions insufficient

Speaking alongside Ukraine’s Foreign Minister Andrii Sybiha, Budrys criticized the current state of European sanctions targeting Russia, asserting that Europe cannot claim it has exhausted all possible measures.

“Only 40% of Russia’s capacity is under sanctions. We cannot afford to say that we have done everything possible in terms of sanctions. No, we have not,” Budrys said.

18th EU sanctions package in progress

According to Budrys, the European Union has already begun work on its 18th package of anti-Russian sanctions. This new round aims to cover sectors of the Russian economy that remain untouched by previous restrictions.

Budrys emphasized that the upcoming sanctions are expected to include personal restrictions on top managers within Russian corporations, as well as new limitations on Russian exports.

The Lithuanian foreign minister underscored the need for the EU to synchronize its efforts with the United States, reinforcing the necessity of united transatlantic pressure on Russia.

Western companies have paid at least 40 billion euros ($46 billion) in taxes to Russia over the past three years, according to an investigation by investigative outlet Follow the Money published on June 10.

This figure represents almost one-third of Russia's defense budget for 2025.

Seventeen of the 20 largest foreign corporate taxpayers in Russia come from G7 and EU countries, Ukraine's main international supporters, the investigative outlet wrote, citing an earlier report by the Kyiv School of Economics (KSE) and the B4Ukraine association.

Foreign firms still operating in Russia represent a crucial lifeline for Russia's war chest amid Western sanctions and skyrocketing war expenditures.

Earlier reports by KSE said that only 472 of over 4,000 foreign companies have withdrawn from Russia after the outbreak of the full-scale war in Ukraine in 2022, while 1,360 have scaled down their operations.

Austrian bank Raiffeisen remains the largest European payer of corporate taxes in Russia, with 457 million euros ($522 million) paid only in 2023. In total, U.S. companies generated the greatest revenues for Russia, followed by German commercial entities.

Philip Morris tobacco company, PepsiCo, UniCredit Bank, Mars, and other Western business giants have also continued filling Russian coffers, even though Western governments have donated some $170 billion in military aid to Ukraine to face Russian aggression, according to the investigation.

The firms provided various explanations for their continued presence in Russia. Some argued that their products are essential for Russian consumers, while others cited concern for the safety of their employees, the outlet reported.

Follow the Money also noted that Russia makes it difficult for companies to exit its market, for example, by allowing them to sell their assets only at extremely low prices. Russia has also previously directly seized assets of some companies that had remained in the country.

Companies that have decided to leave the market reportedly had to pay over $170 billion in write-offs and exit taxes.

Russian President Vladimir Putin called for punitive action against Western companies still operating in Russia, saying they must be "strangled" in response to what he described as Western attempts to suffocate the Russian economy.

Despite the rhetoric, Russia continues to explore paths for re-engagement with foreign businesses. In February, Putin instructed his government to prepare for the eventual return of Western firms.

Still, no formal requests have been received from companies seeking re-entry, according to Dmitry Medvedev, deputy chairman of Russia's Security Council and former president.

Key to Russia’s potential defeat lies in its economy

As the war in Ukraine grinds on, attention remains fixed on the battlefield. But Russia’s most vulnerable flank is not in the trenches — it’s in the treasury. The West, and especially the United States, holds economic levers that could push Vladimir Putin toward serious negotiations or even collapse

The Kyiv IndependentWojciech Jakóbik

Russia's central bank on June 6 lowered its soaring interest rate from 21% to 20%, indicating easing pressures from inflation.

The decision marks Russia's first rate cut since September 2022.

The central bank decreased rates by 100 basis points, bringing it to 20% from the 21% rate established in October 2024 — the country's highest level since the early 200s. The move follows a drop in inflation, which fell from 10.7% in January to 6.2% in April, according to Russian official data.

"While domestic demand growth is still outstripping the capabilities to expand the supply of goods and services, the Russian economy is gradually returning to a balanced growth path," the central bank said in a statement on June 6.

Still, fiscal policy will remain tight "for a long period" as Russia aims to return inflation to its 4% target, the bank said.

Sanctions on Russia are working, Ukraine just needs more

Sanctions on their own won’t end the war, but they are a crucial tool in the West’s efforts to pressure Putin.

The Kyiv IndependentDominic Culverwell

The rate decrease comes amid pressures from politicians to lower rates due to concerns of stagnating economic growth.

Russian Economy Minister Maxim Reshetnikov on June urged the central bank to cut rates in order to boost growth, aiming to achieve a 3% growth target set by Russian President Vladimir Putin.

Elvira Nabiullina, the governor of the Russian central bank, has been hiking borrowing costs in response to skyrocketing inflation. Nabiullina has been credited with keeping the Russian economy afloat as the West imposed massive international sanctions following Moscow's full-scale invasion of Ukraine.

Putin, however, has expressed displeasure with the decline in private investment due to the high cost of credit.

Russia has been forced to slash key projects across various sectors in the face of an economic slowdown, brought on in part by plummeting oil prices. Major Russian exporters have also cut down on rail shipments of metals and oil products, even beyond earlier projected reductions.

EU tariffs on Ukrainian goods return after 3 years of war, complicating Kyiv’s path to European integration

The European Union is set to reinstate tariffs on Ukrainian agricultural exports on June 6. This is the first time since Russia’s full-scale invasion that the EU will not renew an agreement suspending trade barriers between Ukraine and Europe. The end of tariff-free trade comes amid mounting opposition to Ukrainian

The Kyiv IndependentLuca Léry Moffat

Elvira Nabiullina, the governor of the Russian central bank, is facing government pressure to reduce the high key interest rate imposed amid skyrocketing wartime inflation, Bloomberg reported on June 2, citing undisclosed sources.

The reason is the growing toll on the federal budget and civilian industries, three officials told Bloomberg, with some calling for the decision to be made at the bank's meeting on June 6.

Russia's central bank imposed a 21% key interest rate in October 2024 — the highest level since the early 2000s — to tackle surging inflation, which has dropped to 6.2% this April from 10.7% in January, according to Russian official data.

The high borrowing costs primarily impacted civilian industries unrelated to the Russian military-industrial complex, which has experienced growth amid Russia's record wartime spending, Bloomberg reported.

Nabiullina was seen as a key figure in helping the Russian economy stay afloat as the West imposed massive sanctions due to Moscow's full-scale invasion of Ukraine in 2022.

The bank governor has nevertheless faced backlash over her decision on borrowing costs. In January, Russian President Vladimir Putin voiced displeasure with the decline in private investment due to the high cost of credit.

After some positive signals earlier in 2025 due to U.S. President Donald Trump's outreach to Moscow and hopes for a ceasefire, more recent reports again indicate a sharp slowdown in Russia's economic growth.

Analysts have connected this development to the central bank policies, sanctions, low oil prices, supply difficulties, and high inflation.

As Trump fails to sanction Moscow, few expect breakthrough during upcoming Russia-Ukraine talks

As Ukraine and Russia prepare for peace talks scheduled for June 2 in Istanbul, few observers expect a breakthrough. While the U.S. and Ukraine have pushed for an unconditional ceasefire, the Kremlin has rejected it. Instead, Moscow has regularly voiced maximalist demands that are unlikely to be accepted by

The Kyiv IndependentOleg Sukhov

Russia is expanding its missile reserves, increasing drone production, and modifying drone technologies as part of a long-term military strategy to achieve its war objectives in Ukraine, according to the Institute for the Study of War (ISW) on 26 May. These developments signal Russia’s full commitment to securing victory through military means in a protracted conflict, according to the think tank.

ISW stated that Russia’s growing stockpile of ballistic missiles, rising drone output, and ongoing drone adaptations demonstrate a sustained effort to strengthen its strike capabilities. The Economist, citing Ukrainian government sources on 25 May, reported that Russia has accumulated around 500 ballistic missiles. At the same time, Moscow is reportedly producing about 100 Shahed explosive drones per day — roughly four to five times the daily output estimated in late 2024.

Ukrainian military intelligence told The Economist that Russia intends to increase this drone production to 500 units per day, although no specific deadline was mentioned. Engineers in Ukraine noted that Russian forces are actively modifying Shahed drones to overcome Ukrainian electronic warfare systems. These upgrades include the use of artificial intelligence and integration with Ukrainian internet and mobile networks for improved navigation.

Following a record 355-drone attack, Russia launches 60 drones—Ukraine intercepts most

New Shahed tactics

A Ukrainian officer interviewed by The Economist stated that Russian drones are flying at altitudes of 2,000 to 2,500 meters, beyond the effective range of small arms and shoulder-fired missiles used by Ukrainian mobile air defense units. On 25 May, Lieutenant Andriy Kovalenko, Head of Ukraine’s Center for Countering Disinformation, reported that Russian forces had set a new altitude record with a Shahed drone flight reaching 4,900 meters.

Colonel Yurii Ihnat, spokesperson for Ukraine’s Air Force, confirmed on 26 May that Russia is producing both Shahed and decoy drones in higher numbers and deploying them at higher altitudes. Ihnat also noted that Russian forces resumed the use of Kh-22 cruise missiles after a period of reduced deployment. According to ISW, the resurgence of large-scale missile and drone strike packages aligns with Russia’s broader strategy of enhancing its domestic weapons production and long-term war preparations.

ISW: Russia ramps up missile strikes and propaganda in bid to crush Ukrainian morale and Western will

Russia’s goals unchanged, but it economy struggles 

Ukraine’s Foreign Intelligence Service Chief Oleh Ivashchenko said in a 26 May Ukrinform interview that Russia’s goal of full control over Luhansk, Donetsk, Zaporizhzhia, and Kherson oblasts remains unchanged. He warned that Russia is also preparing for a future conflict with NATO, in line with ISW’s assessments.

“ISW also continues to assess that the Russian government and military are preparing for a possible future conflict with NATO. Russian authorities recently renewed their years-long narrative rejecting the legality of the dissolution of the Soviet Union in 1991, likely to set conditions for Russia to deny the independence and sovereignty of other former Soviet states in the future,” the think tank wrote.

WP: Trump softens on Putin as Russian battlefield edge declines

Ivashchenko noted Russia’s economic struggles, with its sovereign wealth fund reduced to $38 billion from $150 billion pre-invasion, and highlighted reliance on Soviet-era equipment. He stated that foreign aid from North Korea, China, and Belarus is playing a growing role in Russia’s defense industry.

“Russia’s efforts to increase domestic drone and missile production and ongoing adaptations of these strike packages are likely part of a broader Russian effort to prepare for a protracted war in Ukraine and possibly a future war with NATO,” ISW wrote.

Russian President Vladimir Putin on May 26 called for punitive action against Western companies still operating in Russia, saying they must be "strangled" in response to what he described as Western attempts to suffocate the Russian economy.

"We should strangle them. I agree completely. I'm speaking without any shame, because they're trying to strangle us. We need to reciprocate," Putin said during a meeting with Russian entrepreneurs.

The remarks came in response to a proposal from one business representative to "slightly" restrict the work of remaining Western companies, naming Microsoft and Zoom as examples.

The participant claimed, citing unnamed analysts, that Russia's IT industry was losing billions due to continued reliance on foreign services. Putin took the suggestion further, urging the government to identify those still using Western software.

"Give us everyone who can't get rid of these bad habits. I'm not kidding, seriously," he said.

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Following the start of the full-scale invasion of Ukraine in February 2022, hundreds of Western companies exited Russia or suspended operations under public pressure and legal sanctions.

According to data from the Kyiv School of Economics, 472 foreign firms have fully withdrawn from Russia, while another 1,360 have scaled back their operations.

In some cases, Moscow has directly seized assets from companies that remained in the country. The Kremlin's increasingly hostile approach has been viewed as retaliation for freezing around $300 billion in Russian sovereign assets abroad.

Despite the rhetoric, Russia continues to explore paths for re-engagement with foreign businesses. In February, Putin instructed his government to prepare for the eventual return of Western firms.

Still, no formal requests have been received from companies seeking re-entry, according to Dmitry Medvedev, deputy chairman of Russia's Security Council and former president.

Russia can attack Europe 2-4 years after war’s end, faster with lifted sanctions, Ukrainian intel chief warns

“If the sanctions are lifted, the rearmament process will proceed much faster,” Ukrainian foreign intelligence (SZRU) chief Oleh Ivashchenko said in an interview with Ukrinform.

The Kyiv IndependentMartin Fornusek