On 20 June, during a massive aerial attack, Ukrainian forces shot down dozens of Russian drones due to new interceptors developed by Ukrainian companies. President Volodymyr Zelenskyy has emphasized that this tool is no longer a rarity and is now actively used in the country’s defense, UkrInform reports. 

Four companies in Ukraine are working on interceptor production, two of which are showing significant success. Zelenskyy has announced that Ukraine has reached agreements with international partners, Germany and Canada, to fund large-scale production.

According to the president, the G7 summit approved an increase in funding from $2 billion to $4 billion. This will accelerate the launch of mass production of advanced interceptors.

In addition, Ukraine has already signed contracts for record quantities of artillery systems and various types of drones. Zelenskyy stressed that the war demands a simultaneous buildup of both artillery and drones.

Earlier, the Ukrainian defense intelligence agency stated that Russia stockpiled over 6,000 strike drones and another 6,000 decoys, and its daily production rate is increasing, from 170 drones per day today to 190 drones per day by the end of 2025. 

Crucially, Moscow no longer relies on Iran: it has established a closed-loop production cycle for drones on Russian territory.

The European Union shelved proposals to lower the price cap on Russian oil exports from $60 to $45 per barrel, citing concerns that escalating conflict between Israel and Iran could drive up global oil prices and undermine the effectiveness of the sanctions mechanism.

Two diplomats confirmed to POLITICO that the plan, originally scheduled for discussion among EU foreign ministers on Monday in Brussels, is no longer viable given current market volatility.

“The idea of lowering the price cap is probably not going to fly because of the international situation in the Middle East and the volatility,” one diplomat told POLITICO.

At the recent G7 summit in Canada, member countries reached consensus on postponing the decision. “At the G7 meeting this week, it was agreed by all the countries they would prefer not to take the decision right now,” the diplomat explained, noting that while oil prices were previously close to the current cap, recent fluctuations have made timing problematic.

European Commission President Ursula von der Leyen acknowledged the complexity of the situation at the G7 summit, stating that existing measures “had little effect” previously. However, she noted that with recent oil price increases, “the cap in place does serve its function,” indicating there is currently “little pressure on lowering the oil price cap.”

US blocked efforts to lower price cap on Russian oil

The current price ceiling mechanism was established by G7 countries in December 2022, setting the maximum price for Russian crude oil at $60 per barrel. Ukrainian President Volodymyr Zelenskyy criticized this initial limit as “weak,” arguing that such pricing remained “quite comfortable for the terrorist state’s budget.”

The sanctions framework was expanded in February 2023 to include petroleum products, with caps set at $100 per barrel for premium products like diesel fuel and $45 per barrel for discounted products such as fuel oil. These price ceilings have remained unchanged since their introduction.

In January 2025, Nordic and Baltic countries—Sweden, Denmark, Finland, Latvia, Lithuania, and Estonia—called on the European Commission to further reduce the Russian oil price cap, highlighting the need for more aggressive economic pressure on Moscow.

Earlier, Reuters reported that most G7 countries had been prepared to independently lower the price ceiling on Russian oil, even if US President Donald Trump opposed the measure. However, the current geopolitical volatility has shifted calculations.

The European Union is considering moving nearly €200 billion of frozen Russian state assets into riskier financial instruments to generate higher returns for Ukraine, Politico reports.

A new approach to frozen assets, yet still only proceeds are used instead of immobilized funds 

According to four unnamed EU officials cited by Politico, the European Commission is weighing a proposal to transfer Russian sovereign assets held in Belgium into a “special purpose vehicle” under the EU’s umbrella. The assets, frozen since 2022 in response to Russia’s full-scale invasion of Ukraine, could be placed in higher-yield investments without affecting the underlying capital.

This strategy aims to deliver greater financial support to Ukraine “while avoiding accusations of stealing Moscow’s money,” which remains opposed by several EU countries including Germany and Italy.

Responding to political and budgetary pressure

The initiative comes amid increasing urgency to secure sustained funding for Ukraine, as US president Donald Trump threatens to cut US support. The EU’s €18 billion share of a previously agreed €45 billion G7 loan is expected to be fully paid out by the end of 2025, raising concerns about Ukraine’s finances in 2026.

EU finance ministers will convene on 19 June in Luxembourg to begin informal talks on future funding strategies. An invitation letter from the rotating Polish Council presidency, obtained by Politico, urges ministers to explore all available options, including the use of frozen Russian assets and the EU’s new defense loan scheme, SAFE.

Legal tightropes and Hungary’s veto threat

The current sanctions regime that blocks Russian assets requires unanimous EU renewal every six months. Hungary under pro-Russian Prime Minister Viktor Orbán has repeatedly threatened to veto these renewals, potentially risking the unfreezing of the funds.

To circumvent this, the EU is discussing ways to shift the assets from Euroclear, which currently invests them at low risk with the Belgian central bank, into a “special purpose vehicle” that could pursue higher returns. However, no final workaround has yet been devised to neutralize a Hungarian veto, Politico notes, citing two informed officials.

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.”

The world holds its breath after an Israeli strike on Iran, but Kyiv braces for worse as Washington’s priorities may shift, Radio Free Europe/Radio Liberty reports. 

Global reaction has been mixed, ranging from calls for restraint to avoid a regional war to open support for Israel’s decisive action. But for Ukraine, this escalation spells troubling consequences.

Analysts warn that the rising tensions between Israel and Iran could prompt the United States to divert its attention and resources from the war in Ukraine to the Middle East. This would be a deeply dangerous shift for Kyiv, which depends on uninterrupted allied support to resist Russian aggression.

“Without a doubt, this will distract some attention from the defense of Ukraine against Russian aggression,” said Roland Freudenstein, a Brussels-based analyst.

The Trump administration has been clear about its intent to bring the war in Ukraine to a swift close, even at the cost of painful compromises. A new crisis in the Persian Gulf only reinforces this narrative. Meanwhile, Trump’s self-imposed “two-week” window for striking a deal with Russia has just expired.

Beyond geopolitics, energy markets are also feeling the impact. Following Israel’s strikes, oil prices surged to $75 per barrel, a $5 spike in just hours. That’s direct profit for the Kremlin’s war chest.

“If the Middle East crisis deepens, it will inevitably push energy prices up. And in some ways, this benefits Russia,” warns analyst Ian Lesser.

While considering a price cap of $45 per barrel on Russian oil, the European Union risks losing leverage. Kyiv is demanding even tougher measures, a $30 cap, to strangle the Kremlin’s war financing. But in the current chaos, this plan may become harder to implement.

Once again, Ukraine stands to become a victim in a war, this time between Israel and Iran.

Montenegro will manufacture unmanned aerial systems (UAS) for Ukraine and NATO under a newly signed agreement with a US firm, backed by up to $15 million in American military aid through the Foreign Military Financing (FMF) program, the Montenegrin Government reports.

Militarnyi reports that on 29 May, the Government of Montenegro approved a letter of intent to invest in UAS production in cooperation with US-based By Light Professional IT Services LLC. The Montenegrin government confirmed that the first batch of drones produced under this initiative will be donated to Ukraine.

The plan reportedly involves a joint effort between two Montenegrin companies (Tara Aerospace and Polimex) and two US firms (By Light and 4WINDS LLC). By Light will contribute its expertise in vertical takeoff drones (HALO series) and FPV drones (PERSES). 4WINDS LLC is expected to establish a Montenegrin subsidiary to support the implementation.

Deal aligns with Podgorica’s Ukraine support

According to the Montenegrin Government’s document, the deal aligns with national goals to support NATO, Ukraine, and regional security while fostering a new sector of economic growth.

Montenegro confirmed its legislation allows the production and export of military equipment and hazardous materials. 

The production and export of arms will follow the country’s national arms control list, harmonized with the European Union’s Common Military List. Additional legislation is under preparation and is scheduled for the fourth quarter of 2025.