"The ideal outcome for Russia is exactly the same as that for Saudi Arabia and OPEC, i.e. maintenance of the status quo and the sanctions regime on Iraqi oil. Thus, Russia's opposition to a U.S. invasion of Iraq is completely rational."
Less oil from country "x", country "y's" oil becomes more valuable. This is especially true in a cartel market, where even those outside the cartel cooperate (Russia somewhat, Norway, Mexico)
Sanctions and pipeline bombings easier to do that backroom negotiations at OPEC meetings...I'd bet those can get hairy!
This article is an example of OPEC's effort at the time to change Russian thinking about increasing exports and become stronger against the Iraq war - despite US promises about debt payments and such.
BTW, Fegelhauer (?) at Moscow Times commented later that this was the reason for Putin's strong opposition to the war - though he didn't know at the time of the Al Mada oil voucher list!
This sure is a lonely thread... :)
Moscow Times February 25, 2003
"Russia is not interested in the start of a war," said Sergei Markov, a Kremlin-connected political analyst.
Russia has long feared that a U.S. strike could open up Iraq's vast oil patch, leading to a sharp drop in oil prices.
Russia has also been attempting to secure the stakes of its oil majors in Iraq ahead of a possible regime change. Oil industry sources said Friday that Energy Minister Igor Yusufov was planning a secret visit to Baghdad this week in an attempt to seal new oil field contracts with Iraq, Reuters reported.
November 14, 2002
Deferent and Defiant Putin
Pavel Felgenhauer
After many months of protests, Russia approved an Anglo-American UN Security Council resolution that will apparently soon serve as legal backing for a U.S. -led military intervention to oust Saddam Hussein. Other long-time critics of U.S. plans of regime change in Iraq -- France, China and Syria -- also voted yes. But of all those nations, Russia has most to lose if an American viceroy replaces Hussein in Baghdad. Syria is an Arab nation that has for decades been one of Hussein's worst enemies and in 1991 sent two armored divisions to help evict the Iraqis from Kuwait. The fall of Hussein and the disintegration of his regime would surely be applauded in Damascus.
France and China have profited in recent years, by selling Iraqi oil on contracts granted by Hussein. But if, as many experts predict, the fall of Hussein and the opening of Iraq triggers a serious fall in oil prices, France and China may benefit as their oil import bills shrink.
Russia will surely lose either way. It will no longer have Hussein's oil export contracts, while low oil prices will wreck its budget. Of course, Moscow cannot stop regime change in Iraq. Still, unlike the French, the Russians did not participate seriously in the wrangling in the UN to try to defend their vital national interests. It seems Iraq is fully off the Kremlin radar screen, while Chechnya and the aftermath of the Moscow hostage-taking fully absorb President Vladimir Putin's attention.
Out for a drive...
From the article:
The global oil industry has thrived due to OPEC interventions in the oil market,
The writer has fallen for OPEC's PR. OPEC controls nothing. As the article itself points out, they are responsible for only a third of the world's production, and the members of OPEC themselves cheat on their declared quotas, meaning that they do not control the price of oil, the can't even control their own production levels. Production levels are controlled by internal political and business considerations. Successful countries are struggling despite what they say to double production, and countries like Iran and Venezuela are doing well just to meet their quotas; actually Venezuela can't meet their quota so OPEC announces a production cut, as if it were a decision taken rather than just the acknowledgement of reality.
and the only reason why Russia's economy still has a future is because of the supply reduction decision taken by OPEC in March 1999.
The writer is delusional.
several years of allowing uncontrolled supply growth among its members that brought the oil price down toward $10 per barrel
Actually, recession in Asia caused the price of oil to tumble. The recovery of the Asian economies, especially the increasing industrial activity in China, coupled with Venezuela's inability to produce, has tightened up oil supplies.
, having control through a friendly regime of the probable 250 billion barrels of Iraqi oil reserves...
To this writer a commercial relationship and paying market prices is "having control".
...provides a very considerable cushion against the growing risk of regime change in Saudi Arabia.
Removing sanctions will create the cushion we need to reduce the importance of Saudi oil, whatever happens to the regime. Removing sanctions could have been done without removing Saddam, if oil were the only consideration.
It would be an irony indeed if events in Baghdad this winter were to signal the end of the modern oil era and OPEC
OPEC is not the oil industry. They have never had the kind of control over the oil market that the press has attributed to them. But a friendly government in Baghdad eliminates most of our need for Saudi basing and Saudi diplomatic support, which has been proved to be unreliable in any event.
This is what the events in Baghdad have done; they have exposed the fact that the Saudis are not much more reliable than the French, and they have ended our reliance on them. We don't need them any more.
That fact alone is sending shockwaves through the region.
As for OPEC, most new oil is non-OPEC. New Iraqi oil is coming on stream, unless the guerrillas can stop it. Caspian oil is ramping up by double digits per year. Russian oil is increasing by double digits. New African oil is on its way to market.
OPEC's only relevance is their fictional ability to control the markets but it is China's growing economy and the world's economic cycles in general that has more effect on fuel prices than anything OPEC does.
It is not a coincidence, though, that guerrilla attacks focused on oil infrastructure, and environmental obstruction of new energy development, are restricted to non-OPEC countries. You will never find Friends of the Earth worrying about critters in Iran endangered by a new pipeline. And you won't find Al Qaeda attacking Iranian oil pumping stations. They will be attacking Iraqi pipelines, and I expect to see the PKK reactivated to go after Baku Ceyhan. "Friends of the Earth" will organize and incite uprisings and lawsuits to stop latin american pipelines outside of Venezuela, while ignoring new Venezuelan oil projects.