by Lewis Brown
Putin's Russia is vulnerable to low oil prices, as Neil Barnett has previously pointed out for the CPS in his report 'Deploying the Saudi Oil Weapon Against Russia', published earlier this year.
Neil's analysis is gaining traction, as shown by Roger Boyes' article in today's Times.
"Cheap oil may yet turn out to be the food of love. Plunging prices will hammer shareholders in the big multinationals, and rattle the Emiratis, but they could also produce an extraordinary peace dividend. The course of war is about to change in Ukraine, Iraq and Syria — and Vladimir Putin, who has been busy rebranding himself as a generalissimo, may find himself confined to barracks.
"To make the sums add up in Russia, Mr Putin needs to be earning between $100 and $110 per barrel of Brent crude. Yesterday it was down to $86 and all the signs from Saudi Arabia are that it could stay that way, perhaps for as long as 18 months. That’s a disaster for Mr Putin and his growth model whereby oil and gas profits were funnelled into the consumer economy. The failure should show the US that the most potent way of responding to Moscow’s aggression is to produce more oil and consume less of it."
As Barnett wrote for the CPS:
"On Russia, as on ISIS, Obama is starting to emerge from behind the sofa.
If oil prices continue to slide and the US makes good on its upstream sanctions threats, the combined effect on the Russian economy will be stark, both short term and long term. Whether that deters Putin’s adventurism is another matter – but there is ample proof that doing nothing encourages him, and is no longer an option."
It is encouraging to see Neil's ideas being picked up - both by the media and, hopefully, by politicians. The Saudi oil weapon might just encourage Russia to realise further intervention (or indeed acting against Western attempts to defeat tyranny elsewhere) is not in its self-interest.