Russia bombing in Syria escalates oil price war with Saudi Arabia

Vladimir Putin’s order to begin bombing targets in Syria has left many political pundits in Washington and London wondering exactly what Russia’s ultimate strategic goal is in the Middle East.

Aside from propping up Bashar al-Assad’s regime, the presence in Syria of Russian bombers flying missions against opposition targets marks the biggest deployment of Moscow’s forces in the region since the Soviet intervention in Afghanistan.

Then, as now, oil had a big part to play in the Kremlin’s decision to strike. In 1979, as Russian tanks rolled into Kabul, oil was approaching $110 per barrel and the Islamic revolution in Iran weakened the West’s grip on the dynamics of supply and demand.

  • David Murrell

    Note that the last time Russia deployed a large force outside its borders, in 1979 in Afghanistan, another ultra-weakling president ruled in the White House, Jimmy Carter.

  • Ed Ellison

    This is Russia’s answer to the Saudi’s attempt to control the price of oil and hurt/cripple Russia’s oil income (along with a few other countries in the neighborhood like Iran).
    I’m somewhat surprised that it took Putin this long to figure out what he had to do to weaken the Americans and the Saudis.

    • Exactly. The OPEC monopoly artificially reduced the price of oil on the world market by dumping cheap oil, after they discovered last year that they had much more oil in reserve than they had originally calculated. They have enough oil in reserve to continue to flood the market and kill competition for a number of years. Once they think their competitors are sufficiently crippled to shut down operations, they will start selling again at normal market prices.

      • Waffle

        What are “normal market prices”?

      • T.C.

        Geez. So I was wrong to short oil based on my assumption that the recent staggering increase in supply of cheap North American fracked oil had something to do with forcing OPEC to lower their prices? Silly me.

  • Hard Little Machine

    Now it’s only a matter of time before Iran decides to open and close the Persian Gulf at their leisure. Oil will be $400/barrel by the time Obama leaves office.

    • Norman_In_New_York

      Not quite. The rise in oil prices by as little as $20 per barrel will make American fracking profitable again and thus cap any further increase. That, plus moving Canadian oil sands operations into the black, will cause much pain to the bad actors among the oil producers.

      • Hard Little Machine

        If Obama is still in the White House he’ll wave his scepter and outlaw it even on private land.

        • Waffle

          I think Texas might have a word or two to say about that

  • Ho Hum

    I doubt that Putin is getting involved in Syria as a way to drive up oil prices. Most of the Russian oil companies have seen increases in profits because of the weak Russian currency as they get paid in US dollars. It has been US producers and Canada’s tar sands that have been hurt the most by low oil prices. The low oil prices are a the result of a deal between John Kerry and the Saudi’s that was intended to hurt Russia but has backfired spectacularly threatening 1000’s of jobs in the U.S. and Canada.

  • simus1

    Let’s see.
    If iran and its shia puppets in iraq control the southern oil fields.
    If iran, the PKK Kurds and assad (plus Russia behind the scene) wind up controlling the northern oilfields and erdogan is reduced to being a mere pipeline manager ….

    Putin would sleep very soundly with a permanent smirk on his mug when awake.