Russia’s Arctic LNG Project Quietly Resumes Amid Sanctions

Economic

Commodity

Summary:

Despite U.S. and EU sanctions, two Russian-flagged LNG carriers have visited the Arctic LNG 2 site within two months, raising suspicions that Russia may have quietly resumed LNG export operations from the embattled project....

Arctic LNG 2 Shows Signs of Life Despite International Sanctions

In a discreet yet potentially consequential development, Russia's Arctic LNG 2 project long hindered by Western sanctions may have resumed some level of activity. Within the span of just two months, two Russian-flagged liquefied natural gas (LNG) carriers under U.S. sanctions have been observed docking at the project site, signaling a possible attempt by Moscow to revive its frozen gas export ambitions.

The most recent vessel, Voskhod (formerly North Mountain), docked at the Arctic LNG 2 terminal on Wednesday, according to maritime tracking data. The ship, sanctioned by the U.S. in October 2024, is now commercially managed by a Moscow-registered firm. Its arrival follows a similar pattern to that of the Iris, another blacklisted LNG carrier that was reported moving toward the same terminal just weeks prior.

These movements mark the first confirmed visits to the site in several months and have sparked speculation that Russia is either testing the waters for renewed operations or has already quietly resumed small-scale LNG shipments.

Sanctions and Strategic Navigation

The Arctic LNG 2 project, situated on the Gydan Peninsula, was once Russia’s flagship LNG development designed to expand its energy export capacity to Europe and Asia. However, the site has been paralyzed by successive waves of U.S. and EU sanctions targeting not only the facility itself but also associated tankers and service infrastructure.

Despite these restrictions, Russia appears determined to find new workarounds. Industry observers note that the Voskhod's updated registration and operational management in Moscow could be a legal maneuver to bypass sanctions-related ownership issues.

Still, no concrete evidence confirms that the vessels have loaded LNG for export. The lack of official documentation, coupled with the silence from Russian energy authorities, leaves room for ambiguity. But the timing and recurrence of ship arrivals suggest a calculated effort to test or restart operations without public scrutiny.

Export Challenges and Ghost Cargoes

Exporting the LNG even if produced remains fraught with complications. In one telling example, a sanctioned LNG tanker that reportedly loaded cargo in August 2024 wandered at sea for four months, unable to secure a buyer. The ship passed through the North Sea, Mediterranean, Suez Canal, Indian Ocean, and East Asia, only to return to Russian waters with its cargo still unsold.

This incident underscores the chilling effect of secondary sanctions. Potential buyers especially in Asia remain wary of engaging with blacklisted Russian entities, even as global LNG demand persists.

Strategic Persistence Amid Sanctions

Russia's Arctic LNG 2 may be inching back into operation, but the road to full-scale exports remains fraught with logistical, legal, and geopolitical hurdles. While the arrival of sanctioned LNG carriers at the terminal signals Moscow’s persistence, it also highlights the mounting difficulties of selling sanctioned energy in a tightly surveilled global market.

Unless Russia can either resolve its geopolitical tensions or establish reliable off-sanctions trade corridors, the Arctic LNG 2 revival may remain limited to symbolic or experimental activity more a defiance of sanctions than a return to commercial normalcy.

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Economic

Escalating Tariff Tensions Cast Shadow Over Eurozone Economy

President Donald Trump’s latest threat to impose a 30% tariff on European Union (EU) imports is sending shockwaves through European economies, with analysts warning that the measure could tip the region into recession as early as the second half of 2025. Export-heavy sectors such as automotive and pharmaceuticals both of which are deeply reliant on the U.S. market stand particularly vulnerable.

The U.S. remains the EU’s largest trading partner, absorbing nearly 20% of its exports. Analysts from Pantheon Macroeconomics and Oxford Economics suggest that if the tariff is implemented and maintained, Eurozone GDP growth could fall by 0.3 percentage points in 2025 and a further 0.5 percentage points in 2026, leaving overall growth rates at just 0.7% and 0.8%, respectively.

Oxford’s Angel Talavera added that such a contraction would bring the bloc dangerously close to technical recession, with economic activity stalling over multiple quarters.

Fed May Cut Rates, But Europe Faces Bigger Fallout

Meanwhile, in the U.S., Federal Reserve Governor Christopher Waller hinted at potential rate cuts later in July due to signs of weakening economic momentum and rising unemployment. Yet analysts argue that Trump's tariff policy is undermining the same growth the Fed is trying to stabilize. A report seen by Fortune estimates that tariffs could shave 0.1 percentage points off U.S. GDP growth in 2025, increasing to 0.3 points in 2026.

But while the U.S. economy may weather the impact with some cushioning from fiscal and monetary policy, Europe lacks the same flexibility. Unlike the U.S., the Eurozone faces tighter structural constraints and fewer alternative export markets of comparable scale.

Sectoral Pressures and Growing Joblessness

The automotive, pharmaceutical, and metals sectors are expected to bear the brunt. Deutsche Bank reports that, beyond the universal 30% tariff, more targeted levies include 25% on cars and parts, and up to 50% on aluminum and steel imports. Even pharmaceuticals one of Europe’s key export industries may face tariffs of up to 200%, according to Trump’s threats.

In the UK, unemployment has already climbed to 4.7% the highest in four years highlighting the fragility of Europe’s labor market in the face of trade shocks.

Markets Remain Optimistic For Now

Despite the looming threat, European equities remain buoyant. Germany’s DAX has soared over 21% year-to-date, aided by a spike in defense spending. France’s CAC 40 is up 6%, and the Stoxx Europe 600 and UK’s FTSE 100 hover near record highs. Market participants seem to be betting on the likelihood of a negotiated resolution or the assumption that the tariffs may be scaled back or delayed.

However, as ING’s Carsten Brzeski noted, the current tariff scenario is far more severe than anticipated even in worst-case projections just weeks ago. The European Central Bank (ECB), which initially based its forecasts on a maximum 20% tariff, now faces a potential inflationary backlash if it retaliates.

The prospect of a full-scale trade confrontation between the U.S. and EU has introduced a new layer of geopolitical and economic risk to an already fragile global recovery. With European growth sputtering and unemployment ticking up, policymakers may be forced into reactive measures in both fiscal and monetary domains. While the equity markets appear calm, the underlying fundamentals suggest that 2025 could be one of the most volatile years for transatlantic trade in recent memory.

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Economic

China Achieves Early FDI Milestone with High-Tech Sector Leading the Surge

China has officially surpassed its FDI goal for the 14th Five-Year Plan period six months ahead of schedule, as announced by Ling Ji, Vice Minister of Commerce and Deputy International Trade Representative, during a press conference. Between 2021 and June 2025, the country attracted a total of $708.73 billion in actual foreign direct investment, exceeding the $700 billion benchmark set for the entire five-year period.

This achievement highlights China’s continued ability to attract foreign capital even in a complex global environment, driven by proactive industrial policies and a focus on high-quality investment. The country also saw the establishment of around 229,000 foreign-invested enterprises during this period roughly 25,000 more than the previous five-year plan (2016–2020).

FDI Enterprises Driving Economic Contributions

FDI enterprises now account for approximately one-third of China’s total foreign trade volume, one-fourth of the nation’s industrial value-added output, and one-seventh of total fiscal revenue. Moreover, these firms have collectively generated over 30 million jobs across various sectors, reinforcing their role as a crucial pillar of China’s economic structure.

Notably, the quality of FDI has improved significantly. In 2024, high-tech industries represented 34.6% of total FDI inflows an increase of 6 percentage points compared to 2020. This shift reflects the government’s push toward innovation-driven development and its commitment to transforming China into a global hub for advanced manufacturing and digital industries.

Ongoing Support for Foreign Businesses

In an effort to enhance the investment environment, China’s Ministry of Commerce has organized over 30 roundtable meetings with foreign firms since 2023. These sessions addressed more than 1,500 concerns and policy suggestions raised by international companies, underscoring the government’s responsiveness to foreign investor needs.

Ling Ji emphasized that China is not only pursuing larger FDI volumes but is also prioritizing investment quality and alignment with national development goals. He affirmed that efforts would continue to create a transparent, stable, and predictable environment for foreign businesses.

China’s early achievement of its FDI target under the 14th Five-Year Plan is a strong signal to the international business community. With sustained policy support, growing high-tech investment, and a continued commitment to market openness, the country remains an attractive destination for global capital. This success is likely to bolster China’s position in global supply chains and reinforce confidence in its long-term economic trajectory.

Source: China Daily

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Gerik

Economic

Germany’s Fertility Crisis Hits a New Low

In a development that signals deep demographic challenges ahead, Germany recorded a fertility rate of just 1.35 children per woman in 2024, according to the Federal Statistical Office (Destatis). This marks the lowest level in nearly two decades, down from 1.38 in 2023 and far below the population replacement threshold of 2.1. The total number of births fell to 677,117, a drop of 15,872 compared to the previous year.

The decline reflects a broader trend across the EU, but Germany’s drop is particularly alarming due to its large population and economic influence within the bloc. Demographers warn that prolonged low fertility could severely impact the nation’s pension system and labor force in the decades ahead.

Diverging Trends Between Citizens and Immigrants

The data reveals a stark disparity between German nationals and foreign-born residents. In 2024, the fertility rate among German women fell to just 1.23 the lowest since 1996 while non-German women maintained a higher rate of 1.84. However, the latter group also shows a declining trend, continuing a downward trajectory that began in 2017.

This contrast underscores the significant role of immigrants in sustaining Germany’s birth rate, although the gradual decline among this group suggests that even immigration may not fully compensate for the broader demographic shift.

Regional and Behavioral Shifts Deepen the Divide

Regionally, Lower Saxony (Niedersachsen) posted the highest fertility rate at 1.42, while Berlin had the lowest at 1.21. Western Germany generally fared better than the East, with average birth rates of 1.38 and 1.27, respectively.

The trend toward later parenthood persists. In 2024, the average age of first-time mothers was 30.4 years, and 33.3 for fathers, unchanged from recent years. The average age at childbirth overall was 31.8 for mothers and 34.7 for fathers. This delay is often attributed to economic uncertainties and career prioritization.

Structural Barriers to Parenthood

Experts point to structural obstacles as key contributors to the fertility slump. According to Martin Bujard of the Federal Institute for Population Research (BiB), many Germans still want children but delay due to mounting economic and social insecurities. Katharina Spieß, Director of BiB, highlights the insufficient availability of child-rearing infrastructure such as daycare and preschools as a major deterrent to family formation.

These observations align with broader Eurostat data showing a continent-wide decline in fertility, with the EU’s average falling to 1.38 in 2023 from 1.51 a decade earlier.

Germany’s record-low birth rate signals more than a statistical dip it reveals a looming demographic shift with far-reaching economic and social implications. With aging populations and shrinking workforces on the horizon, the challenge now lies in reversing the trend through proactive family policies, improved childcare access, and long-term stability. Without such measures, Germany and other EU nations may face a slow erosion of their economic vitality and social cohesion.

Source: DW

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Economic

Direct Impact on German Economic Growth

On July 16, Germany’s Macroeconomic Policy Institute (IMK) issued a warning that the proposed 30% tariff on European Union imports by US President Donald Trump could substantially hinder Germany’s economic performance. Specifically, the IMK projects a 0.25 percentage point reduction in German GDP growth in both 2025 and 2026. The growth forecast for 2026 would then drop to just 1.2%, down from a previous estimate of 1.5%.

These projections undermine expectations of a modest recovery by late 2025, which was anticipated to be supported by increased public investment and defense spending. The US, until 2024, was Germany’s largest export market, accounting for nearly 10% of total exports making Germany highly vulnerable to any American trade restrictions.

Spillover Effects Across Europe

IMK also warned that these tariffs could have broader consequences for the European Union, with ripple effects likely to hit neighboring economies due to decreased demand from the US and supply chain disruptions. Weakened US demand, combined with higher prices on European goods, would make it harder for EU exporters to maintain market share, particularly in sectors like automotive and machinery.

Given these rising risks, IMK emphasized the importance of the German government accelerating the implementation of its proposed economic stimulus measures to help buffer domestic businesses from external shocks.

Possible Backfire on the US Economy

Interestingly, the IMK highlighted that the US might suffer even greater economic harm from these tariffs. Higher import duties on EU goods are expected to raise consumer prices in the US, erode real household income, and dampen spending especially among middle and lower-income households.

These inflationary pressures could also force the Federal Reserve to maintain tighter monetary policy for a longer period, delaying interest rate cuts and reducing overall GDP growth. IMK estimates the US could see its own growth shrink by as much as 0.7 percentage points.

The Trump administration’s protectionist trade agenda could produce unintended economic consequences, not only weakening Germany’s recovery but also placing the US economy at risk. While aimed at safeguarding domestic industry, a 30% tariff on EU imports may ultimately create inflationary pressure, reduce household consumption, and prompt a global economic backlash. In an already fragile post-pandemic recovery, such measures risk disrupting the balance between growth, trade, and stability on both sides of the Atlantic.

Source: Reuters

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Devin

Commodity

Economic

Gold prices rose on Friday as a weaker U.S. dollar and ongoing geopolitical and economic uncertainty boosted demand for the safe-haven metal, while platinum prices eased after reaching their highest level since 2014.

Spot goldrose 0.5% to $3,353.80 per ounce, as of 0947 a.m. EDT (13:47 GMT), after falling 1.1% in the previous session.

U.S. gold futureswere also up 0.5% to $3,360.50.

"In the precious metals space, there are gains across the board, courtesy of a weaker dollar," said Marex analyst Edward Meir.

"We do not see much of a bearish case in gold over the medium-term given all that is going on, including out-of-control U.S. spending, lingering trade tensions, inflation uncertainty and the constant Fed bashing thrown in lately for good measure."

The dollarwas down 0.5% for the day. A weaker dollar tends to make gold cheaper for buyers holding other currencies.

Earlier this week, Trump said he was not planning to fire Federal Reserve Chair Jerome Powell. Still, he kept the door open to the possibility and renewed his criticism of the central bank chief for not lowering interest rates.

Market participants are anticipating two U.S. rate cuts by the end of this year, totalling 50 basis points. (FEDWATCH)

Gold thrives during economic uncertainty, and lower interest rates boost investor demand as it is a non-yielding asset.

On the tariff front, Indonesia is still negotiating the details of its recently reached trade deal with the United States. Meanwhile, U.S. Treasury Secretary Janet Yellen told the Japanese Prime Minister that their countries can get a "good agreement".

Spot platinumfell 0.7% to $1,448.03 per ounce, after hitting its highest since August 2014 earlier today.

Palladiumclimbed 0.7% to $1,289.50, its highest since June 2023, and silveradded 0.5% to $38.31.

"In precious metals, the carnival has moved on from safe-haven gold to silver, platinum and palladium as pro-growth, industrial alternatives," said Adrian Ash, head of research at online marketplace BullionVault.

Source: TradingView

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Kevin Du

Central Bank

Incoming Austrian central bank Governor Martin Kocher said Donald Trump’s attack on the Federal Reserve’s independence puts price stability at risk.

The former economy minister — who’s set to replace Robert Holzmann on the European Central Bank’s Governing Council in September — said Trump’s administration is disregarding Fed independence based on dubious legal reasoning and with the clearly stated desire to reduce US debt costs.

“A government can find more short-term financial maneuvering room via lower interest rates, more money supply or the direct financing of expenses if it steers both fiscal and monetary policy,” Kocher said in a post on his website. “But all this fans inflation, and can in the worst case lead to galloping inflation or hyperinflation — and there are clear examples in economic history.”

Trump is on a relentless campaign to pressure the Fed into cutting rates, which he considers far too high. This has renewed the question of how much a US president can and should influence an institution designed to be independent.

Kocher’s comments echo remarks by Bundesbank President Joachim Nagel, who said earlier Friday that interference in Fed independence would be felt outside of the US.