PrintDecember 16, 2008
Russia may cut oil production in tandem with OPEC
The dramatic drop in oil prices is seriously hurting the petro-states, and now may redefine the pecking order of the world's major countries.
Russia, according to a report by Toby Harnden of the UK Telegraph, is considering cutting its oil production in tandem with OPEC. Unlike Saudi Arabia, Venezuela and Iran, Russia is a member of the G-8, supposedly the club of the advanced countries, responsible for keeping the world from sliding into chaos.
The Kremlin will risk throwing away its membership of the G8 group of leading economies by acting with the cartel in reducing supplies.Russian leaders have sent strong signals that they will agree the unprecedented move at the same time as Opec convenes an emergency meeting in Algeria on Wednesday.Russia has been under pressure from Opec to cut as many as 300,000 of the 9.75 million barrels it produces each day to help maintain prices.Dmitry Medvedev, the Russian president, has even hinted that his country - the world's largest oil producer and second largest exporter - could join Opec despite the potential political fall out.
Preoccupied as we are with America's economic difficulties, most Americans do not realize that the oil price slide has severely weakened our enemies, squeezing their ability to finance their basic operations, like, say, Iran's nuclear program.
The geopolitical map of the world is being redrafted. There is certainly peril, but also opportunity, as villainous actors find themselves economically constrained so soon after realizing their dreams of riches. Those with restive populations have their own internal problems to consider. There is a risk of aggression, as a means of reducing internal stresses, but there is also the possibility of collapse under economic pressures far greater than America's current difficulties.
Hat tip: Larwyn
