Russia Goes Nuclear in Arctic, Bombers Buzz NATO Line? TU-95s Position Sends Shockwaves In Europe
Russia has deployed two additional nuclear-capable Tu-95MS strategic bombers to its Arctic Belaya Airbase, just 150 km from NATO member Finland, signaling a significant escalation amid rising tensions with NATO and ongoing conflict in Ukraine. These long-range bombers, capable of carrying cruise missiles over 2,500 km, enhance Russia's military reach in the Arctic—a new frontline in the Russia-NATO confrontation.
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Mint
3 hours ago
- Mint
War upends the oil trade. How it could play out.
Israel's attack on Iran early Friday sent shock waves through the oil market, which relies on the region for one-third of global supplies. The reverberations won't go away soon. Oil prices spiked 14% in the immediate aftermath of the attacks, before giving back some of those gains. Brent crude, the international benchmark oil price, rose 7% on Friday to $74.23 per barrel. Based on recent history, oil's rise might seem fleeting. For most of the past three years—since the early days of the Russia-Ukraine war—geopolitical events haven't had a lasting impact on oil prices. The Israel-Hamas war and continuing violence in Ukraine have barely impacted the oil market, because they didn't dramatically affect supply and demand. But the price shock from the Israel-Iran conflict could last weeks because major oil infrastructure could be in the line of fire. 'It is something that seems like prices could remain elevated for some time," says Rob Haworth, who oversees investment strategy for U.S. Bank Asset Management Group. If the conflict grows substantially, analysts have predicted oil prices could surge over $100 per barrel, and perhaps as high as $120. The extent of the price-move depends on how the war escalates. Israel didn't directly strike Iran's oil infrastructure on Friday, but some analysts expect Israel to hit those facilities if the war continues. Iran, for its part, is in a position to disrupt oil shipments in the region, which could cause prices to spike even more. Iran produces about 3.2 million barrels of oil a day, and exports between 1.5 million and two million barrels of it. That is a significant piece of the 103 million barrels of global oil production, but not enough to completely disrupt the market. Israel isn't a major player, historically pumping less than 10,000 barrels a day. Israel could disrupt production if it hits Kharg Island in the Persian Gulf, which houses much of Iran's oil export infrastructure. Iran, in turn, has plenty of ways to respond that could affect the oil market even more. Iran and the military groups it supports, including the Houthis in Yemen, could create much wider disarray. After the Israel-Hamas war began in 2023, the Houthis attacked ships in the Red Sea—some of those carried energy products—causing a brief spike in the price of oil. But the Red Sea doesn't transport that much oil. The most important waterway is the Persian Gulf, which sits between Iran and Saudi Arabia. Iran and its proxies could block the Strait of Hormuz, a narrow waterway that connects the Persian Gulf to the Gulf of Oman and which offers access to markets all over the world. Thirty percent of the world's seaborne oil trade flows through it. China, which buys more of Iran's oil than any other country, is particularly dependent on supplies that come through the strait. Financial firm Lazard thinks oil prices would surge above $120 if the strait is blocked, and the U.S. would probably have to get involved to unblock it. Lazard thinks a short disruption to the strait is possible but considers an extended blockade 'highly unlikely due to catastrophic internal and international consequences and the ability of the U.S. Navy to intervene to open up the strait." Given its location and military capabilities, Iran could impact the market in other ways. Two Saudi Arabian oil facilities were damaged in military strikes in 2019, severely curtailing oil production, and Iran was believed to be behind the attacks. Tensions between Saudi Arabia and Iran have eased since then, but Iran could widen the conflict again by hitting Saudi facilities. J.P. Morgan analyst Natasha Kaneva thinks a wider Middle East conflict would cause an oil shock that could take prices over $120. Based on how oil traders reacted to the latest escalation of the war, she thinks the market is implying a 17% chance of a much more severe impact. Such a dramatic price spike feels like a long shot. The overall oil supply-demand picture is still bearish, with global oil supply set to outpace demand this year because of expected production hikes from members of OPEC. 'We expect, absent a wider war, today's rise in prices will likely prove to be a sell-the-news event," wrote Morningstar analyst Allen Good. The conflict, and its higher oil prices, isn't a reason for investors to pile into energy stocks, but it's a reminder of why they can be important pieces of a portfolio. Oil stocks jumped on Friday, even as the broader market and some Big Tech names fell. Exxon Mobil was up 2.2%, and Occidental Petroleum rose 3.8%. 'When tech stalls out, there's a natural rotation to energy companies," says Jay Hatfield, portfolio manager of the Infrastructure Capital Equity Income exchange-traded fund. 'They're actually pretty good hedges." Hatfield's fund owns Exxon and Chevron, which he thinks offer investors exposure to the industry without as much risk as smaller names. Oil's gains may well fizzle out eventually. But this war appears to be far from over, and oil is right in the middle of it. Write to Avi Salzman at
Mint
4 hours ago
- Mint
As the NATO summit approaches, more than cash is at stake
What makes a good NATO ally? Debates over burden-sharing have 'moved and shaken" the alliance ever since its foundation in 1949, says Rafael Loss of the European Council on Foreign Relations, a think-tank. Most recently, Donald Trump, in both his first and his present term, has justifiably railed against Europeans for not paying their fair whack while America keeps them all safe. He has struck a chord, even with the laggards. Belgium's defence minister has vowed to end a 'period of national shame" whereby the country 'was not loyal to its status as a founding member of NATO, but acted as the most notorious free rider of the entire alliance". Even Iceland, which has no armed forces, is looking into ways of being 'a good ally". To get a sense of how things stand, look to the 'three Cs": cash (how much is spent), capabilities (what it is spent on) and commitment (deployment on missions). Begin, as politicians generally do, with cash. At first glance there is much to commend. All but ten of NATO's 32 members meet the current spending target of 2% of GDP, compared with 25 delinquents a decade ago. Italy and Spain, two of the alliance's lowest spenders, have pledged to hit it this year, too. But the positives mostly stop there. For one thing, the 2% goal is obsolete; at the summit that will open on June 24th in The Hague, the alliance is expected to agree to a new target of 3.5% of GDP, plus a further 1.5% for complementary infrastructure. Moreover, the narrow focus on percentages is a poor way of measuring fighting readiness. Members have long padded their figures by cramming barely related budget items under the umbrella of defence. A better gauge of who is pulling their weight is to look at what the cash is spent on. NATO asks that members spend at least 20% of their military budgets on equipment. Virtually all meet that mark (see chart), though it is likely to be raised to one-third at the summit. But again, a focus on numbers can obscure whether the kit serves the purpose of collective defence. Take Greece. Last year it lavished 36% of its military budget on equipment, one of the highest rates. Yet much of that is focused on countering Turkey, another NATO ally, not Russia. The alliance has long sought to influence the kit bought by members through the NATO Defence Planning Process. Under this, allies agree to buy equipment based on the alliance's operational needs. But two decades of fighting jihadists bent that process out of shape. Many members invested in a hotch-potch of systems without much co-ordination. The Russia threat has helped focus minds. 'Instead of building forces for a range of potential scenarios across multiple theatres," write Angus Lapsley and Admiral Pierre Vandier, two NATO officials in charge of the new planning cycle, allies will be asked to 'focus primarily" on deterring Russia. What the division of labour will look like is not yet clear. NATO is expected to sign off on new 'capability targets" in June, which will determine the equipment each member will be asked to provide. They will probably prioritise areas where America has traditionally dominated but may now pull back, such as intelligence collection, deep strike or strategic lift. Just over three-quarters of members have agreed to the new plans, including 'those who [don't] usually accept", noted Mr Vandier. NATO is mulling greater specialisation. The head of its Military Committee, Admiral Giuseppe Cavo Dragone, has called for a 'multi-speed approach" whereby bigger armed forces would take on the brunt of projecting power against Russia, while smaller states focus on more humdrum but achievable tasks like logistics or cyber-security. That is already the case to some extent. Luxembourg, with just 900 soldiers, is a critical node in providing space-based satellite communications and contributes to NATO's spyplane programme. Iceland operates an air-defence and surveillance system. But cajoling recalcitrants like Spain and Italy might be trickier. Planners could play to their strengths by asking them to invest more in maritime assets. NATO should take heart when it comes to actual operational commitments, the third C. Even the stingiest allies have skin in the game. On the eastern flank, Spain is in charge of a brigade-sized multinational force in Slovakia, and Italy oversees one in Bulgaria. Portuguese fighter aircraft help patrol the skies over the Baltics. Nearly every small member—from Croatia and Albania to Slovenia—contributes troops to NATO's eastern flank. The more pressing question is whether these limited commitments will be beefed up. In the case of a major war in the east, NATO wants to be able to muster around 100,000 troops within ten days, a sharp jump from the 40,000 it budgets for today. It wants to raise a further 200,000 troops within 30 days. Without American boots, Europeans will struggle to be ready to reach those targets, unless they spend considerably more on recruitment. Cash might still be king after all. © 2025, The Economist Newspaper Limited. All rights reserved. From The Economist, published under licence. The original content can be found on
Hindustan Times
4 hours ago
- Hindustan Times
Insurance premiums to rise in bad year for aviation, say experts
New Delhi It's a payout no one -- neither airliners nor passengers -- hopes would ever come to pass, but aviation insurance is set to get costlier amid rising risks and air fatalities, experts say. Mishaps and war have already ratcheted up the stakes, capping a dream run of low, stable premiums, which are poised to jump this year. The lumbering Russia-Ukraine conflict, a spate of air accidents and the apparent start of an Israel-Iran clash have added significantly to those risks, an industry executive said, requesting anonymity. Earlier this month, a UK judge ruled that insurance companies must compensate aircraft lessors and airliners for planes seized by Russia as part of its counter-sanctions reprisal, adding a new dimension to aviation insurance. The year 2025 was already beginning to prove to be a tipping point with the Potomac River mid-air collision in the US this January. It shattered the calm of 2023 when no large plane was involved in a fatal accident, according to aviation groups. The encounter between American Airlines Flight 5342 and an army helicopter near Washington was the deadliest US disaster in over a decade. 'This changed sentiments dramatically in New York and London, two financial centres where the largest aviation reinsurance businesses are concentrated,' said Mathew Pannerselvam of Troth Broking Ltd. The crash of Air India AI 171 outside Ahmedabad's airport on Thursday has already made 2025 the deadliest in a decade globally with over 480 fatalities, according to figures from the Virginia-based Flight Safety Foundation. The London, Gatwick-bound Boeing 787 jetliner crashed moments after taking off, unable to power its initial climb and barely able to clear a neighbourhood just outside the runway. Insurance payments to follow from the Air India crash are likely to be the costliest in Indian aviation history because of the extent of damages, including to properties on the ground and non-passenger fatalities, the executive cited in the first instance said. The accident resulted in the complete destruction of the aircraft and the death of all but one passenger. The payouts could potentially reach nearly $100 million if the totality of liabilities is taken into account, said a second executive from Marsh India, an investment advisory firm, requesting anonymity. The main insurer of the Air India Dreamliner was TATA AIG while several other firms underwrote part of the liabilities, including National Insurance and Oriental Insurance, a third industry analyst said, asking not to be named. Most large insurers opt for reinsurance, an arrangement where the original insurance firms protect themselves against losses by transferring their own risks to a reinsurer at a cost. 'In aviation, this is the norm and very little risks remain with the original insurers,' one of the industry executives cited above said. In the case of the AI 171 flight too, just about 10% of the liability will have to be borne by Indian insurers, whose aviation businesses are covered under a global reinsurance programme, the third analyst cited above said. Aviation insurance is never a single product, analysts said. A commercial plane typically is covered by several types of risk packages. The most critical ones include cover for hull losses during flight and taxiing, as well as when an aircraft is stationary. Passenger liability covers allow airliners to compensate the next of kin in case of fatal accidents. Tata Sons, the conglomerate that owns Air India, on Thursday announced that it would pay ₹1 crore to the next of kin of each passenger on board the fatal flight. Airliners also need to take out a public liability policy for third-party compensation, just as in car insurance, to pay for damages caused to other aircraft, objects or people. Insurance premiums make up no more than 1.5-2% of airlines' costs, very little compared to spending on fuel or maintenance, and premiums can range from $45000 to $150,000, depending on aircraft type, age and routes travelled, among other parameters, according to data from AerCap Holdings NV. The insured value of a commercial jetliner can range from $112 million to $230 million. The insurance industry is 'good at adapting to changes' and risks from emerging wars were earlier considered 'second-order risks', Bruce Carnegie-Brown, the chairman of Llyod's of London, one of the largest aviation insurers, told Bloomberg last month.
