Russia closes railway border crossings with Finland, Estonia and Latvia

In an unexpected move, Russia announced several railway border crossings with Finland, Estonia and Latvia to be “temporarily” shut down. Could this indicate an upcoming mobilisation in Russia as Moscow lacks troops for its ongoing all-out war against Ukraine?

Russia's decision to suspend traffic through several railway border crossings with Finland, Estonia, and Latvia affects key trade routes, including the ones used by Finnish company VR Group and Estonian company Operail. The closures, which started on Wednesday, involve crossings at Iomantsi, Vartius, and Nuijamaa in Finland, as well as crossings at Narva and Koidula in Estonia. Russian Railways, the state-owned railway company, announced the suspensions without providing a reason. The move is expected to impact cargo shipments, including oil and timber exports.

The railway shutdowns could lead to increased costs for European oil refineries, which rely on Russian oil imports, potentially affecting the price of gasoline and diesel fuel. For instance, the closure of the railway border crossing at Iomantsi, a key route for Russian oil exports to Finland, may force refineries to seek alternative and more expensive supply routes. This, in turn, could lead to higher fuel prices for consumers. The impact on oil prices could be significant, given that Russia is one of the world's largest oil exporters.

The railway closures are the latest development in the escalating tensions between Russia and its neighbors, particularly since the start of the conflict in Ukraine. Historically, Russia has used its control over energy exports as a tool of foreign policy, and the current move may be an attempt to exert pressure on Finland, Estonia, and Latvia. Insiders suggest that the closures may be related to Russia's ongoing mobilization efforts, as the country struggles to maintain its military presence in Ukraine. The move also reflects the complex web of economic and geopolitical relationships between Russia and its neighbors.

In the coming weeks, the European Union is expected to review its energy security strategy, which may include measures to reduce dependence on Russian oil imports. A key decision is expected on June 15, when the EU's energy ministers meet to discuss the bloc's energy policy. Meanwhile, Russian Railways is scheduled to release its quarterly earnings report on July 20, which may provide insight into the financial impact of the railway closures. Surprisingly, despite the tensions, Russian oil exports to Europe have actually increased in recent months, highlighting the complex and often contradictory nature of the region's energy politics.