US aims to pressure Russia could trigger major conflict

US aims to pressure Russia could trigger major conflict

By Claude Salhani - Trend:

The price of oil surprisingly went down last week from a high of about $120 per barrel to a low of about $80. It was delightful news for consumers who felt the difference instantly at the pump.

The Organization of Petroleum Exporting Countries from their headquarters in Vienna announced the cut last week - a significant saving of $40 per barrel.
Thank you, OPEC. However, the question begs to be asked: why would the oil producers who have over the years raised the price of oil at just about every opportunity they got suddenly felt the urge to reduce the price?

According to Saudi Arabia, the largest producer of oil and gas in the Middle East and a key OPEC member, the revision of the price of oil downwards was done in order to adjust the markets. Hmmm, have they indeed?

Perhaps a better explanation can be found in analyzing who stands to gain the most and who loses the most from such fluctuation in the price of oil.

A quick analysis reveals that Saudi Arabia, Qatar, the United Arab Emirates and the United States, all countries with solid economies, would not be affected by the sudden shift downwards.

The same cannot be said for three gas and oil producers, who are cash-strapped and will be further hurt by falling prices. Indeed, the countries likely to suffer the most due to lower prices of oil are Russia, Iran and the so-called Islamic State.
Coincidentally, these countries are also currently engaged in highly controversial conflicts with the United States and the West.

Russia is involved in Ukraine's civil war, supporting the separatists, a highly criticized move condemned by the United States and its Western allies. The allies are studying how best to impose sanctions on Russia and to hit it where it hurts the most - its economy.

Iran is already suffering from sanctions imposed by the West for its pursuit of a nuclear program. Many countries remain skeptical over Iran's claim that it will not use nuclear technology for military purposes.

The Islamic Republic is involved in the civil war in Syria, supporting President Bashar Assad, whom the US and its allies want to see vacate the Syrian presidency. Iran also funds and supports the Lebanese Shi'ite militia, Hezbollah that is backing Assad.
The other entity that will be hurt by falling oil prices is the so-called Islamic State, who controls some of the oil wells in Iraq and Syria. The Islamic State was under-selling the established markets by accepting payment of $18 per barrel.

While Russia, Iran and the Islamic State are cash-strapped, their involvement in current conflicts further drains their economies.

Historically, it is worth recalling that near the end of the Cold War, when Washington and Moscow were at each other's jugular, the US pushed for lower oil prices to apply further pressure on the Soviets. What followed was the beginning of the end of communism and the disappearance of the Soviet Union.

What is happening today is a repetition of what happened the last time around, the former Cold War warriors fought it out. The danger in pushing Russia too tightly into a corner is that like a cornered bear, it will retreat until it realizes that it can no longer retreat and the it pounces.

The Obama administration should bear this in mind and avoid pushing Russian President Vladimir Putin into a corner lest he pounces. The results of such action would be disastrous for all.
--
Claude Salhani is senior editor at Trend Agency, in Azerbaijan. You can follow him on Twitter @claudesalhani

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