He was Russia's richest man and spent ten years in the gulag. Mikhail Khodorkovsky on Ukraine, Putin and failed talks to merge with a U.S. oil giant

Mikhail Khodorkovsky, once Russia's richest man and a former gulag prisoner, says President Vladimir Putin has little interest in ending the war in Ukraine and has abandoned earlier pragmatism, a view expanded in a think-tank article. His remarks — alongside references to failed talks to merge with a U.S. oil giant — underscore persistent Kremlin-driven geopolitical risk that keeps pressure on Russian-related emerging-market exposure, energy-sector M&A prospects and investor risk appetite.

Analysis

Market structure: A durable Kremlin unwilling to negotiate implies a higher baseline for geopolitical risk — bullish for upstream hydrocarbons (Brent risk premium) and defence contractors, punitive for Russian assets, EM risk and European gas-exposed utilities. Mechanism: sustained risk premium keeps Brent above ~$80/bbl and TTF-style summer/winter spreads elevated, supporting cashflows for XOM/CVX and LNG exporters while compressing European utility margins and raising power prices.

Risk assessment: Tail scenarios include escalation to NATO involvement, full Russian gas cutoffs in a winter (high impact, low prob) or broad secondary sanctions on non-Russian buyers; these would spike commodities and safe-haven FX. Time horizons: immediate (days) = volatility spikes and risk-off; short (weeks–months) = re-rating of energy/defense capex and fiscal deficits in Europe; long (quarters–years) = structural shift to diversified LNG, higher energy security capex and secular defense budgets.

Trade implications: Primary actionable seizure is energy upstream and defence exposure with options to manage event risk; hedge macro via gold/USD and short EM/Europe cyclicals. Volatility will keep option premia rich — favor defined-risk call spreads on XOM/CVX and buy-writes on RTX/LMT for yield capture, while using short-dated puts on EEM to express EM downside.

Contrarian angles: Consensus prices a persistently higher energy premium but underestimates shale/LNG supply elasticity in 12–36 months that can cap upside — this creates mispricing in long-dated energy calls. Also, risk-off may be overapplied to large-cap integrated US energy (XOM/CVX) where balance-sheet strength and buybacks make downside limited; conversely some defense names already price-in large wins, so prefer relative-value structures to avoid overpaying.

Key Decisions for Investors

• Establish a 2–3% portfolio position long in US integrated energy (split XOM 60% / CVX 40%) within 1–2 weeks; size to 2–3% and hold 3–9 months. Add another 1% if Brent 10-day SMA > $85; trim 50% if Brent 10-day SMA < $70 for 30 consecutive trading days.
• Initiate a 1.5–2% tactical allocation to defense via RTX and LMT (equal-weight) using 3–6 month defined-risk call spreads (buy ATM, sell ~25% OTM) to limit premium; target >25% upside in 3–9 months and cut if US defense-budget headlines are neutral/negative for two consecutive months.
• Hedge macro with a 1% position in GLD and 0.5–1% in UUP within 1 week to offset FX/geopolitical spikes; reduce GLD if real yields rise by >100bp in 30 days or if VIX falls below 15 for two weeks.
• Express relative value by going long XLE ETF (2%) vs short EEM (1.5%) for 1–4 months to capture energy/EM dispersion; exit the pair if S&P 500 outperforms MSCI EM by >3% over 10 trading days or if Brent falls below $70 for 20 trading days.