Falling Oil Prices Kill Putin And Give The West Victory
OIL is tumbling in price. But rising in value.
Roger Boyes looks:
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…
Two years ago I attended a simulation game at an Israeli security conference, which imagined what would happen if an Iranian-backed group attacked a Saudi refinery, causing the oil price to rise to $250 a barrel. The conclusion was miserable: war, bread riots, coups in the Gulf. There was only one winner, and that was Russia.
Now the reverse is true. Russia, so heavily dependent on oil revenue, is a loser.