zloy_odessit (zloy_odessit) wrote,
zloy_odessit
zloy_odessit

When oil and gas fail Russia, war comes to the rescue

The attack on oil refineries in Saudi Arabia didn't bring Russia the profit of the scale that could potentially be a result of a hypothetical conflict in the Persian Gulf with the suspension of oil extraction and exports from this global artery of raw material. The short-term hike in oil prices, which doesn't fully satisfy the Kremlin's ambitions, both in value and in export volumes, turned out to be more an irritant than a stimulant of wannabe Empire.

At the same time, not only oil, which is falling in price and demand, is letting Russia down, but also gas, which since year-start has both become cheaper amid lower demand by European importers, showin a nearly 9% drop over the first half of 2019. After the restrictions were imposed on Nord Stream 1, Russia will be forced to increase transit via the Ukrainian gas transmission system, thereby increasing its dependence on Ukraine (how humiliating, isn't it?).

But even this temporary way out of the situation will not satisfy the "global gas pump" as the U.S. is unceremoniously pushing Moscow aside in the world arena of energy sources.
Today, five LNG terminals and 10 LNG plants operate in the U.S. for its export needs alone, while in two years the number of plants will increase to 25, and the sixth terminal will also be commissioned. Thus, the United States will double the volume of exported LNG – the prospects completely drowning Russian bookkeepers into gloom and depression.

Actually, oil and gas are now very much failing Russia's economy and the chances of Moscow being able to level the situation are catastrophically small. That's unless, Russia's good old friend, which is war, doesn't come to the rescue.

It might be local or global, outward t or hybrid – but the return of raw material pricing to a framework that would satisfy Moscow is possible only if there is an ongoing conflict in the region that covers a certain share of the commodity market with its products.

And therefore, the story of attacks on Saudi oil infrastructure is far from being over, as well as the attacks on tankers in the Persian Gulf. Indeed, now it is precisely the period when the hungry wannabe Empire is ready to implement (through other players, of course) the scenarios, of which we have talked and written so much over the past years.

The Kremlin doesn't accept another way of competing in the market, and the brushwood flooring is already there. It remains only to light a match and get the cream.

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