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With Oil Debacle, Putin Suffers His ‘Greatest Defeat’ Ever – OpEd

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Economically, the oil price deal announced by OPEC+ two days ago was “not a defeat for Russia,” Sergey Shelin says; “but in a political sense, this was a capitulation that our regime has not once made in the 21st century, a clear defeat for Putin and his team that everyone can see.

Oil prices have collapsed because of a collapse in world demand, not because of Moscow’s ill-timed effort to affect them, the Rosbalt commentator says; and the agreement that has been reached is nothing more than an effort to share the pain of those declines among  oil-exporting states (rosbalt.ru/blogs/2020/04/14/1838298.html).

But the unprecedented deference Putin showed to the Saudis and especially the speed with which he backed down from his position is a clear political defeat of “the former ‘energy superpower’” which has now humbly agreed to become “a part of a union of several dozen oil-exporting countries, led in fact by the United States and Saudi Arabia.” 

Despite what many Russians think, “oil prices fell not as a result of the March price war” Moscow started “but because the coronavirus epidemic in the course of a couple of months reduced demand for fuel by 20 million barrels a day or 20 percent. This is a historic record.” The exporters have been compelled to respond, but why did Russia act as it did?

The reason Moscow entered into an oil war is that it assumed it could win, but of course, “the probability of success from the very beginning was equal to zero” because demand continued to fall making the Russian play meaningless and even counterproductive. They fooled some in Russia but few elsewhere into thinking they not the Saudis and the US were dominant.

The deal that emerged was not that bad for Russia, but the fact that Moscow hurried to agree rather than holding out for longer suggests that the Kremlin feared that if it didn’t defer, the West might impose sanctions on Rosneft, a political threat it couldn’t tolerate but one that its failure to tolerate showed its own much-reduced political position.

Thus, Shelin continues, what has happened is “a political and not an economic defeat of our regime.” Its failed ploy highlighted what Moscow has most wanted to conceal: it can’t always set the weather. In certain areas, including oil, the market and other players are simply too powerful for it to do so.


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Paul Goble

Paul Goble

Paul Goble is a longtime specialist on ethnic and religious questions in Eurasia. Most recently, he was director of research and publications at the Azerbaijan Diplomatic Academy. Earlier, he served as vice dean for the social sciences and humanities at Audentes University in Tallinn and a senior research associate at the EuroCollege of the University of Tartu in Estonia. He has served in various capacities in the U.S. State Department, the Central Intelligence Agency and the International Broadcasting Bureau as well as at the Voice of America and Radio Free Europe/Radio Liberty and at the Carnegie Endowment for International Peace. Mr. Goble maintains the Window on Eurasia blog and can be contacted directly at [email protected] .

One thought on “With Oil Debacle, Putin Suffers His ‘Greatest Defeat’ Ever – OpEd

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    April 17, 2020 at 5:20 pm
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    Paul Goble is wrong.Putin did win,shell oil in US going bankrupt,Mexico had to cut production as well. What that means for Trump’s oil exports now? Trump has three major problems now; loss of being major oil exporter,loss of jobs,and mismanagement of covid-19, causing him to divert the public attention to the Venezuela issue.

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