The Telegraph: Russia bombing in Syria escalates oil price war with Saudi Arabia

The Telegraph: Russia bombing in Syria escalates oil price war with Saudi Arabia
Oil markets are oversupplied by at least 2m barrels per day (bpd)

Baku. 5 October. REPORT.AZ/ 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.

Report informs citing the Telegraph, 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.

High oil prices emboldened the Soviet leadership and helped the creaking Communist government to finance its Cold War against the West in addition to feeding its population at home. Then, as now, oil exports were vital for Moscow’s coffers, accounting for almost 70pc of the country’s foreign currency earnings.

By placing boots on the ground in Afghanistan the Soviet Union also threatened the West’s vital energy corridor in the Gulf and the host of oil-rich US client states among the region’s newly independent sheikdoms.

The Soviets hoped that their military presence in the region would keep oil prices high enough for the country to win the Cold War by causing economic pain for the major industrialised consumer states in the West.

However, the strategy failed, with the collapse in oil prices in the following decade bankrupting the Kremlin and forcing Mikhail Gorbachev to launch the “Perestroika” reforms that eventually saw the collapse of the old Soviet state.

Putin – who, as the former head of the KGB, is a product of the Cold War – is today faced with the same dilemma as his Soviet forebears. The collapse in oil prices, which has been engineered by America’s major allies in the region – Saudi Arabia, the United Arab Emirates, Qatar and Kuwait – is crippling the Russian economy.

With oil markets oversupplied by at least 2m barrels per day (bpd) and neither Russia nor Saudi Arabia willing to cut back on production, Mr Putin’s intervention in Syria is an attempt to turn the tables on the American-led strategy to bankrupt Moscow.

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