• 30 mins Oil Production Cuts Taking A Toll On Russia’s Economy
  • 3 hours Aramco In Talks With Chinese Petrochemical Producers
  • 4 hours Federal Judge Grants Go-Ahead On Keystone XL Lawsuit
  • 5 hours Maduro Names Chavez’ Cousin As Citgo Boss
  • 12 hours Bidding Action Heats Up In UK’s Continental Shelf
  • 17 hours Keystone Pipeline Restart Still Unknown
  • 21 hours UK Offers North Sea Oil Producers Tax Relief To Boost Investment
  • 23 hours Iraq Wants To Build Gas Pipeline To Kuwait In Blow To Shell
  • 1 day Trader Trafigura Raises Share Of Oil Purchases From State Firms
  • 1 day German Energy Group Uniper Rejects $9B Finnish Takeover Bid
  • 1 day Total Could Lose Big If It Pulls Out Of South Pars Deal
  • 1 day Dakota Watchdog Warns It Could Revoke Keystone XL Approval
  • 2 days Oil Prices Rise After API Reports Major Crude Draw
  • 2 days Citgo President And 5 VPs Arrested On Embezzlement Charges
  • 2 days Gazprom Speaks Out Against OPEC Production Cut Extension
  • 2 days Statoil Looks To Lighter Oil To Boost Profitability
  • 2 days Oil Billionaire Becomes Wind Energy’s Top Influencer
  • 2 days Transneft Warns Urals Oil Quality Reaching Critical Levels
  • 2 days Whitefish Energy Suspends Work In Puerto Rico
  • 2 days U.S. Authorities Arrest Two On Major Energy Corruption Scheme
  • 3 days Thanksgiving Gas Prices At 3-Year High
  • 3 days Iraq’s Giant Majnoon Oilfield Attracts Attention Of Supermajors
  • 3 days South Iraq Oil Exports Close To Record High To Offset Kirkuk Drop
  • 3 days Iraqi Forces Find Mass Graves In Oil Wells Near Kirkuk
  • 3 days Chevron Joint Venture Signs $1.7B Oil, Gas Deal In Nigeria
  • 3 days Iraq Steps In To Offset Falling Venezuela Oil Production
  • 3 days ConocoPhillips Sets Price Ceiling For New Projects
  • 6 days Shell Oil Trading Head Steps Down After 29 Years
  • 6 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 6 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 6 days $1.6 Billion Canadian-US Hydropower Project Approved
  • 6 days Venezuela Officially In Default
  • 6 days Iran Prepares To Export LNG To Boost Trade Relations
  • 6 days Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 6 days Saudi Oil Minister: Markets Will Not Rebalance By March
  • 7 days Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 7 days Rosneft Announces Completion Of World’s Longest Well
  • 7 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 7 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 7 days Ecuador Seeks To Clear Schlumberger Debt By End-November
Alt Text

Don’t Back U.S. Shale To Keep Oil Prices Down

The common assumption that U.S.…

Alt Text

The Surprise Winners Of The Oil Price Rally

The recent rally in oil…

Alt Text

Bankrupt Venezuela Asks Partners For Free Oil

Following Venezuela’s official default last…

The Rationale Behind Russia’s Withdrawal From Syria

The Rationale Behind Russia’s Withdrawal From Syria

As reported around the world, Russia’s decision to greatly reduce its military presence in Syria, coming as it did with little warning, has left the world struggling for explanations.

After having rescued the Syrian Government’s position in Syria from certain defeat and securing a partial truce along with the onset of an imminent peace conference, the partial withdrawal is seen by many as a message to the Assad government to not take Russia’s military aid for granted, and to be more flexible in the upcoming peace negotiations.

If we assume that all wars are essentially trade wars grown large, and in the Middle East, they almost always involve energy, then the Russian gambit in Syria can be viewed from a different perspective. Russia’s economy is currently in recession, partly as a result of western sanctions, but much more seriously hurt by the crashing of energy prices. Related: Is The Latest Rally Yet Another False Start?

Russia’s warming relations with Saudi Arabia has helped to bring about an OPEC-Russian sponsored freeze in oil production, with only Iran refusing to comply. With the Syrian withdrawal, Russia has tempered a major political feud with the Saudis over Russia’s support for Assad, a move that at once increases the prospects for a Russian-Saudi agreement on oil production cutbacks.

There are also many who think that Russia is also increasing pressure on its allies to be more flexible, not only in peace talks but also oil production cuts. With the withdrawal of the Russian protective air shield, Iran and Hezbollah’s ground forces in Syria are suddenly exposed to the threat of Saudi and Turkish air attacks. Will the threat of a looming military catastrophe in Syria force Iran to comply with production cuts?

Many oil insiders believe that after decades of punishing western sanctions, Iran’s oil industry is in no condition to meet its avowed quota for production, so that an agreement on cuts might cause little sacrifice.

Russia’s actions may well have staved off other threats to its business. Recall that Robert Kennedy Jr., the nephew of the slain U.S. President, recently published an article in Sputnik, claiming that the major reason for the west’s attempt to overthrow the Assad government was to build a natural gas pipeline from Qatar that traversed Syria, capturing its newly discovered offshore reserves, and continued on through Turkey to the EU, as a major competitor to Russia’s Gazprom. Related: OPEC Production Declines Despite Iran’s Efforts

By re-establishing the Assad government in Syria, and permanently placing its forces at Syrian bases, the Russian’s have placed an impenetrable obstacle to the development of the Qatar gas pipeline. Russia has also placed itself at the nexus point of other new offshore gas discoveries in the Eastern Mediterranean, including Israel, Cyprus, and Greece.

It’s not hard to imagine a new Russian pipeline to Europe serving these new partners. Could easing of sanctions also lead to the implementation of the long-stalled plans of Gazprom for a second pipeline under the Baltic Sea to Germany for Russia and its partners, Royal Dutch Shell, Germany's E.ON, and Austria's OMV?

If so, we can be assured that the U.S. will be in fierce opposition to any such plans. As George Friedman, founder of Stratfor has stated, the American’s worst European nightmare is an alliance between Germany and Russia. Related: Oil Won’t Stage A Serious Rebound Until This Happens

The timing of the Russian withdrawal could not be more fortuitous, as it occurs at the very pinnacle of the European refugee crisis, a crisis that was caused by Europe’s backing of the Saudi-Turkish attempt to overthrow Assad. For the first time in four years, the truce in Syria offers respite for Syrian refugees, fleeing from constant bombardment and attacks, and raises prospects for increasing security within their homeland.

Is this part of the Russian Syrian gambit? Is Russia gambling on receiving some modicum of European gratitude for helping to stem the flight of refugees to its borders, with the pay-off in terms of easing sanction and enabling its long stalled pipeline projects to be completed.

No, Putin could not possibly be so calculating, could he?

By Robert Berke for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News