Putin’s Oil War With the West Comes at His Allies’ Expense
OREANDA-NEWS As Russia pushes to find new buyers for its oil to skirt ever tougher Western sanctions, it is cutting into the market share of two of its allies — Iran and Venezuela — and setting off a price war that could hurt them all.
The competition for sales to Asia has already forced Venezuela and Iran to sharply discount their crude to try to hang onto the few available outlets for their own sanctioned exports, according to oil analysts and traders.
And although both Iran and Venezuela profess publicly to remain close to Russia, experts expect that if the oil battle intensifies it will raise tensions with the Kremlin even as its leader, Vladimir V. Putin, works to shore up his alliances. On Tuesday, his government announced he would make a rare trip outside the country next week to Iran’s capital, Tehran.
The oil competition set off by Russia’s invasion of Ukraine already appears to be pushing Venezuela a bit closer to the West, after years of a deep freeze in relations over electoral and human rights abuses by the country’s authoritarian leader. The last remaining American oil producer there, Chevron, has been in talks with the Venezuelan government, according to a Venezuelan oil executive and a local official.
Any possible deal to bring more Venezuelan crude onto world markets would help the United States, which is increasingly desperate to reduce oil prices to limit the damage to Western economies from the war and from sanctions imposed on Russian oil. The economic fallout is whittling away at support for Ukraine in its struggle against its larger neighbor.
“The war shows that countries have interests, not enemies or friends,” said Francisco Monaldi, a Venezuelan oil politics expert at Rice University.
The spike in energy prices has given fossil fuels a prominence they last enjoyed in the 1970s, amplifying the effect of the Kremlin’s policies far beyond the battlefields at a time when many world leaders had hoped to begin phasing out oil to tame climate change.
Daniel Yergin, a prominent energy expert and the author of “The New Map: Energy, Climate, and the Clash of Nations,” said the energy crisis was unraveling the last vestiges of the post-Cold War global economy, heralding a new era of great power competition in an increasingly fragmented world.
“Oil and natural gas,” he said, “have become central to the outcome of this new struggle.”
The resurgence of oil and gas — and the fact that so much of global supply comes from Russia — has been Mr. Putin’s strongest weapon against the West, giving him a geopolitical clout far beyond his country’s position as the world’s 11th largest economy.
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