Posted on 08/28/2008 4:33:08 PM PDT by Fred
Fears are mounting that Russia may restrict oil deliveries to Western Europe over coming days, in response to the threat of EU sanctions and Nato naval actions in the Black Sea.
Any such move would be a dramatic escalation of the Georgia crisis and play havoc with the oil markets.
Reports have begun to circulate in Moscow that Russian oil companies are under orders from the Kremlin to prepare for a supply cut to Germany and Poland through the Druzhba (Friendship) pipeline. It is believed that executives from lead-producer LUKoil have been put on weekend alert.
"They have been told to be ready to cut off supplies as soon as Monday," claimed a high-level business source, speaking to The Daily Telegraph. Any move would be timed to coincide with an emergency EU summit in Brussels, where possible sanctions against Russia are on the agenda.
Any evidence that the Kremlin is planning to use the oil weapon to intimidate the West could inflame global energy markets. US crude prices jumped to $119 a barrel yesterday on reports of hurricane warnings in the Gulf of Mexico, before falling back slightly.
Global supplies remain tight despite the economic downturn engulfing North America, Europe and Japan. A supply cut at this delicate juncture could drive crude prices much higher, possibly to record levels of $150 or even $200 a barrel.
With US and European credit spreads already trading at levels of extreme stress, a fresh oil spike would rock financial markets. The Kremlin is undoubtedly aware that it exercises extraordinary leverage, if it strikes right now.
Such action would be seen as economic warfare but Russia has been infuriated by Nato meddling in its "backyard" and threats of punitive measures by the EU. Foreign minister Sergei Lavrov yesterday accused EU diplomats of a "sick
(Excerpt) Read more at telegraph.co.uk ...
Ah, yes, band together.
Let them do it. In the end Russia will lose big time.
Russia is cash rich and in the black, so they can run for a while.
Meanwhile, China will be interested in extra oil, and just loves to not do what we ask (a boycott), and some one's economy must go without oil right away, who's it going to be, Europe or the US?
If they reduce flow or shut it off, Poland should padlock the valves on their side of the line, and leave it shut off for another week or so after the Russians try to put it back into service.
What about that line from the Caspian to Europe by way of Ukraine? Time to get that thing underway, no?
I'm also shorting Obama.
Apparently there is no Russian word for “fungible”.
The Cold War is back and we had better face it!
I think I saw this in a Larry Bond book years ago.
I understand that a fair amount of foreign investment has fled Russia since the Georgia thing.
It seems foolish to play chicken with a fungible commodity.
If Russia loses it’s energy revenue, they’ll probably be out of money in short order.
Seems they need to sell it as much as Europe needs to buy it.
And if Poland isn’t going on a crash diversification program, they are dunderheads.
Oh, B.S. It will take 10 years to see the effects of this oil cutoff at the pump and it probably won’t drive prices up more than a few cents............./s
Most thinking Americans with common sense have seen all of this coming since the Arab oil embargo of the seventies. Some people have wondered why this oil strategy agianst the West hasn't happened sooner. And yes it will work better than the Russian Army. It only depends on how long Russia can do without foreign cash coming in and on how long the West can hold together. I expect the Arabs to start doing this again in earnest some day in coordination with Russia. (The next serious MidEast war should cause it.)
Their cash position is contracting. Western capitalists are making for the door and cash inflows from investment are way down. The big money guys are starting to see that the Russians can't be trusted to keep their mitts of foreign owned assets. Cutting off oil to the west will play hell in the short term. Medium term and beyond? They can't eat oil. And wars are expensive.
Well, if he does carry out the threat... Russia has shot the last bullet in it’s arsenal (outside of full-scale war).
Because after that, just what can Russia do to Europe and America should we... counterattack.
For example, Putin shuts off Western Europe’s oil and natural gas. So, then the US and EU shut down all trade with Russia.
What can Russia do about it? Outside of full-scale war... they have no more options.
And if there isn’t any more options, then the diplomatic game is lost.
Just off the top of my head ... maybe a majority of Americans don't want to see a large number of major American cities reduced to irradiated rubble over a small ex-SSR.
Fungible is not just a funky word. Russia is going to get hurt if they keep this up.
Exactly. Venezuala is a perfect example.
Chavez *HATES* America. But guess who they sell the most oil to?
America.
Why? Cause if they don’t, Chavez will be out on his @ss in one of the quickest revolutions ever seen, for his oil money is buying loyalty.
Without it, he’s gone.
For us more than them.
Medium term and beyond?
We will pull ourselves out and replace the loss, but it will NOT (ever again) be cheap.
They can't eat oil.
They won't have to starve if anyone breaks the boycott.
And wars are expensive.
The way we fight them, Ruskies collect as they go, so it takes longer to cost them.
We could always count on help from the UN.
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