Russia's war plan and the price of oil

Posted Aug 11th 2008 8:13AM by Douglas McIntyre
Filed under: Bad News, Russia, Venezuela, Politics, Oil

Economists think they have most of the data they need to forecast the price of oil: The dollar is rising; consumption in the US is falling; production out of OPEC is steady; the drop in crude has driven many speculators out of the game; unrest is receding in Nigeria and Venezuela; huge deposits have been found off Brazil; the hurricane season in the Gulf of Mexico has not disrupted production.

War is harder to predict, but there it is in Georgia. Russia seems intent on destroying the military of its small neighbor state. The U.S. is pushing to keep Russia from escalating the conflict, which is driving extreme tension between Russia and NATO. Russia is an important supplier of crude, and it could decide to use that as leverage to keep the West out of the dust up.

There is some speculation that the Russian government would like to cripple other countries that share it borders to build a geographic "buffer" to its south. NATO may be forced to step in because some of these countries are close to its members' territories.

War is hard to predict and the oil market does not like the unpredictable. Oil prices are about to rise and could get much higher.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Tags: crude, georgia, inthenews, oil, russia, war

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Reader Comments (Page 1 of 1)

8-11-2008 @ 9:43AM

dr mitchel w eisenstein, said...

you are right about that oil prices could rise. but it is a much more nefarius situation than described. For Georgia to foolishly attack Ossetia and try to push Russia out, it could only have happened if the US was telegraphing certain support for the move. And we all know the history of that kind of support. Ask the Kurds in Iraq after the first Iraq war when we abandoned the Kurds and let them be slaughtered, Or the Bay of Pigs invasion when we led the Cubans to believe we would support them in the overthrow of Fidel Castro. Bottom line is this. This situation is NO ACCIDENT. Is it a coincidence that the price of oil is cratering right now? Russias economy is dependent on the price of oil remaining high. Its the only way russia can rebuild itself. Soooo, when oil crashes they start a war to destabilize the near east and cause the price to spike up. who would be in support of this? George W. Bush. Yes GWB, in China for the Olympics, who wont even return to the US during this major crisis, and Dick Cheney, made a deal with Putin to raise the price of oil. George Bush knows Putins soul alright. Its because they are both demons from hell in bed with each other. They are committed to raising the price of oil as high as possible. we need a supply of silver bulletts for these vampires of death. these blood suckers

8-20-2008 @ 4:23PM

Lex Lowther said...

This is more or less Putin throwing his vote for McCain and any Republicans/Democrats who are fine when it comes to playing war to boost oil prices. Russia is resource rich and a dip in oil is bound to hurt the bottom line.

LEX
http://www.lexlowther.com/?p=110