A friendship founded on oil? | Oil 34

A friendship founded on oil? | Oil 34

Geminello Alvi | Columnist and writer
With Trump's administration, the likelihood of a subverted scenario in the entire area, with a recombining of Russian and American interests, will benefit Israel

It is unlikely that Donald Trump’s approval of Russian Federation President Vladimir Putin prescinds from a clear advantage for the United States. Rarely are the niceties of a rich man independent of his calculation that some economic advantage is possible - in this case that could be represented by oil itself. NATO and Ukraine, ISIS threats and aversion to political correctness are all serious issues of understanding between the two, but they have no single solution and are therefore crippled by excess complication. Oil could therefore provides the crux of an agreement. Rex Tillerson’s appointment as Secretary of State leads to this suspicion, as he has more experience in the Russian oil industry than anyone else. After all, he negotiated a joint venture worth $500 billion with the Kremlin for Rosneft in 2011. It has been clear since the beginning of his presidency that Trump is not supported solely by internet multinationals; rather, all industry, including the oil industry, supports him. Therefore, to give substance to his desire for friendship with Putin, what better gift could Trump give than price stabilization. A price between USD 60 and 80 per barrel could help the Kremlin heal its public balance sheet and reverse its failure to grow. This would also enable frackers in the United States to invest in new projects, all this without American motorists feeling too much damage.

It all started from the oil industry

Even George W. Bush, in the early 2000s, when he decided that relations with Russia should become closer, believed that the best ground for starting this was the oil industry. However, in 2004, Russia’s nationalization of the energy sector and the development of fracking techniques by the Americans changed this picture. The United States became more suspicious and lost its interest in sharing its technology and investment with Russia. In the next decade, the United States was to become a net exporter, and gave a boost to an oil market which had long been deflated. However, for now, better prices are needed by both the Russians and the Americans and this is  a situation that could prevent a repetition of the failure that followed the Energy Summit in Houston in 2002. We should also note that both powers are balanced in that most crucial area for oil, the Middle East, by supporting a local ally, Saudi Arabia, one that had for decades been strategic for the interests of the United States and Iran and one that had evolved to a fully tactical alliance with Putin’s Russia. However, if Russian-American relations were really to use oil as a central point of reference, this Middle Eastern dialectic could change a lot. If the role played by the two allies were to weaken, it could, better than any OPEC and non-OPEC agreement, hinder Saudi Arabia’s downward price control policy and, to keep the balance in play, could isolate and complicate life for Iran.

A complicated game

During his visit to the CIA  at the end of January, Trump regretted that America did not take Iraq’s oil in 2003, adding that perhaps there would be another chance, though his foreign policy team would  walk this comment back  mere weeks later. Trump has also blamed Iran’s influence in Iraq since his electoral campaign. In early February, the since deposed General Flynn condemned the Iranian ballistic missile test and an  attack by Houthi rebels, supported by Iran, on a Saudi vessel. This earned Trump appreciation from his party. In short, the question of a rise in oil prices writhes in a geopolitical game between Russia and the United States that is more than a little complicated. It includes the possible partition of Syria and destabilization of Iran. It is hard to think who will win Saudi Arabia in the end.

In the end, a historic agreement can be spoken of

In conclusion, the Vienna agreement must be judged as a sign of the widespread, perhaps unanimous perception that prices that are too low for public budgets and political stability in the producing countries. With Trump’s administration, the likelihood of a subverted scenario in the entire area, with a recombining of Russian and American interests, will benefit Israel. However, the same cannot be said for Saudi Arabia and other Sunni States in the Gulf. Iran’s difficulties and higher oil prices would make Saudi Arabia superfluous and less strategic. So much is this the case in our brief scenario that we overlooked the fact that the game will not only be played by Trump, but also, and with just as much skill, by Putin.

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