Russian oil spat is a stark warning to the world

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Russian oil spat is a stark warning to the world

Turning off the pipe:

Russian swagger: turning off the pipes

News that Russia has suspended oil shipments to Belarus should give the rest of Europe cause for concern. It shows that more than ever before the country is willing to use its commodities leverage to ensure cooperation, even of its allies.

The collapse of commodities prices in July 2008 illustrated the true vulnerability of the Russian economic growth story: in the second half of 2008 the price of crude oil fell from almost $150 a barrel to under $33 a barrel, forcing the government to take a huge chunk out of its currency reserves to stave off a rouble collapse.

While the fall was almost catastrophic, it appears to have done little to dampen Russia’s swagger, which is riding comfortably once more following the sharp snapback of commodities prices. Like the gas dispute between Russia and the Ukraine in January 2009, Belarus is a

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  1. January 6, 2010

    Nicholas Newman

    I think the writer does protest too much! The reality is most European country’s that import oil products via Belarus from Russia, have at least 100 days oil reserves. The current dispute is more about business than a kremlin plot.see
    Also interesting no mention is made of the efforts of EU on EU – Russian energy issues throught the framework of the Common Energy Policy.

  2. January 6, 2010

    Tomas Hirst

    I agree absolutely, it is not about a Kremlin plot at all. My comment was about the significance of the increasingly aggressive tone of United Russia and the problems this could pose rather than the particulars of the dispute.

    I do think, however, that the frequency of the commodities price stand-offs suggests that external arbitration could be a better solution than continually threatening to cut off supplies. Here I agree that the EU can and must play a fundamental role in bringing Russia to the negotiating table for discussions on the broader issue of Europe’s energy security instead of moralising and trading insults.

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