Crude oil’s drop back into…
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Russia may be getting used to early withdrawals in the news they see.
In September and October it saw three major Western oil companies suspend operations with Russian partners to comply with Western sanctions imposed on Moscow’s oil industry. Now their president, Vladimir Putin, left the summit Group of 20 (G-20) of the world’s major economies in Brisbane, Australia, on Nov. 16 even before the leaders issued their final communiqué.
The Russian leader, who had arrived in Australia from a business trip to China, said he needed to rest before resuming his routine presidential duties in Moscow the following day. But his reception by his counterparts gathered in Brisbane may have been the real reason for his early departure. And it’s all about Russia’s embattled neighbor, Ukraine.
The European Union and the United States have imposed sanctions on Russia and its oil industry because of its annexation of Ukraine’s Crimean peninsula in March, its suspected involvement in the fighting between pro-Russian separatists fighting Ukrainian forces, and the downing of a Malaysian jetliner carrying European and Australian passengers by a missile of suspected Russian origin.
Moscow began to feel their impact in late September when the three Western oil companies – Exxon Mobil of the United States, Total of France and the Anglo-Dutch Royal Dutch Shell – said the sanctions left them with no choice but to end joint ventures with Russian oil companies.
During the Brisbane meeting, several Western leaders warned of more sanctions in response to the assertion by NATO Secretary-General Jens Stoltenberg that Russia had sent combat troops into Ukraine.
British Prime Minister David Cameron said, “If [Putin] continues to destabilize Ukraine, there will be further sanctions, further measures.”
President Obama, in Brisbane, reiterated that threat to Putin in “businesslike and blunt” terms when both were in Beijing last week, and said the NATO allegation, if confirmed, could be seen as an invasion. He said he was “very firm [with Putin] on the need to uphold core international principles, and one of those principles is you don’t invade other countries.”
Putin maintained his denial of any Russian involvement in the Ukraine conflict. In fact, he said, “[T]he situation [in Ukraine] in my view has good chances for resolution, no matter how strange it may sound.” He didn’t elaborate.
Whether Putin left the summit early to avoid further criticism from his counterparts or simply to catch up on sleep, it’s clear that the Western sanctions have hurt his country. The measures, aimed not only at Russia’s oil sector but also at its banks, are putting pressure on the country’s economy at a time when Russia’s currency, the ruble, is weakening because of rapidly falling oil prices.
Obama said the US and the EU are ready to increase that pressure if necessary. “At this point the sanctions we have in place are biting plenty good,” he said after the summit had ended. “We retain the capability, and we have our teams constantly looking at mechanisms in which to turn up additional pressure as necessary.”
By Andy Tully of Oilprice.com
Andy Tully is a veteran news reporter who is now the news editor for Oilprice.com