Return of the Oil Weapon

Forty-two years ago this week, Arab petroleum exporters banded together to impose an oil embargo on Western consumers in retaliation for their support of Israel in the 1973 Yom Kippur War. The five-month-long embargo by OPEC's Arab member states spurred an almost immediate energy crisis in the United States, leading to gasoline lines, odd-even rationing, and violence.

Although the parallels between now and then are inexact, experts and energy traders increasingly agree that oil is once again being used as an economic weapon on the global stage.

Indeed, reports this week that Saudi Arabia has begun making inroads in the traditional Russian energy market of Eastern Europe suggest that oil markets have become just the latest front in the ongoing proxy war over the future of war-torn Syria. And with the Saudis now providing oil at what traders are calling "dumping prices" to buyers in Poland, Riyadh may be sending a message to Moscow through the markets.

"Oil is being used as a weapon because the Saudis want to undercut the Russians in their own backyard," and punish Moscow for its role in the Syrian civil war, said Andrew Scott Cooper, geopolitical risk analyst and author of the forthcoming book, "The Fall of Heaven: The Pahlavis and the Final Days of Imperial Iran."

For Saudi Arabia -- a country currently flexing military muscle across much of the Middle East -- oil is a far more familiar means to an end. Time and time again -- in 1973 against the United States, in 1977 against the Shah of Iran, and in the late 1980s against the Soviets and unruly OPEC states -- Riyadh turned to energy manipulation as a geopolitical weapon.

"There's a blueprint for this," Cooper told the Mideast Memo, and the past year suggests that Riyadh has dusted off its old designs for energy warfare.

There are, however, market machinations behind today's Saudi-Russian standoff, and for reasons that predate the Syrian war. "Moscow and Riyadh were already locked in another battle for market share in Asia long before Syria slid into civil war after 2011 or the West imposed the sanctions on Russia last year," reports Reuters. "Over the past decade, Russia has diverted as much as a third of its oil exports to Asia by building gigantic pipelines into mainland China and its Pacific coast."

Russia, at least publicly, seems somewhat resigned to the new energy landscape. "Every country has the right to sell where it thinks necessary. This is a competition, the toughest competition is going on now," said Russian Minister of Energy Alexander Novak this week.

The Russian energy minister, in a separate interview with C-SPAN, stressed that Moscow "does not exert pressure on the market with any additional supply on its part." But while Moscow claims to be above energy market manipulation, it is rather obvious who it does in fact blame for such shenanigans:

"In my view ... there are two factors that influenced overproduction: very high rates of growth in shale oil extraction and an increase in production by OPEC countries that over the past year have increased production by 1 million barrels a day -- that's a huge number for a market that normally grows, on average, by 1 million barrels a day per annum."

That is a veiled shot at Saudi Arabia and the United States, and with Russia possibly using its newfound leverage in the Middle East as its own oil weapon, the likelihood of an otherwise unforeseen energy shock will only increase.

While increased domestic production and alternative energy sources have insulated the United States somewhat from this round of the oil wars -- gasoline prices are hovering around $3 per gallon across the country -- what U.S. policymakers need to be paying attention to, argues Cooper, is the oil shock to come.

"Energy independence does not mean we are unaffected. America will always get pulled in."

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Around the Region

Putin, Shia champion? Russian President Vladimir Putin's push into the Mideast has sparked a debate among the region's Shiites, claims The Economist:

"Iraq's cartoonists now portray Mr Putin as a Shia tribal hero, giving the region's Shia powers (currently led by Iran) a global reach. Meanwhile, Sunni powers still look grudgingly to America, despite Mr Obama's nuclear deal with Iran. After months of waiting, some of Syria's rebels have at last received an American arms drop (ostensibly to fight IS, not the Syrian regime). In Iraq, America is again arming and training thousands of tribesmen, adding a Sunni flank to the Iranian-dominated fight against IS. On the street and in parliament, some Sunnis have denounced Russia's return to Iraq's stage as vehemently as Shias have championed it. One cartoonist summed up IS's response: ‘Bring back America's bombs and spare us Russia's!'"

Narratives, however, are never quite that tidy, and Al-Monitor's Abbas Qaidaari writes that Shia Iran may have reason to be skeptical of Russian activities in Syria:

"The sharing [of] intelligence and military data can result in Moscow gaining more information regarding the military capabilities of Hezbollah. Considering Israeli Prime Minister Benjamin Netanyahu's silence and implied consent regarding Russia's interference in Syria, it is possible that, in the future, Israel can have better access to confidential information regarding Iran and Hezbollah's military capabilities via Russia.

"Second, Iran and Hezbollah have so far paid the highest military and security price in Syria. Russia's strong presence in the country can easily weaken the strong positions of Iran and Hezbollah, and thus weaken Tehran's position in future political negotiations on the future of Syria."

"I got Syria so wrong." Former State Department adviser Frederic Hof explains the many missteps made by the Obama administration on Syria:

"My failure to predict the extent of Syria's fall was, in large measure, a failure to understand the home team. In August 2011, Barack Obama said Assad should step aside. Believing the president's words guaranteed decisive follow-up, I told a congressional committee in December 2011 that the regime was a dead man walking. When the president issued his red-line warning, I fearlessly predicted (as a newly private citizen) that crossing the line would bring the Assad regime a debilitating body blow. I still do not understand how such a gap between word and deed could have been permitted. It is an error that transcends Syria."

Taking Turkey's Temperature. And finally, Jacob Poushter of the Pew Research Center examines attitudes in Turkey leading up to November's snap election:

"Views about the country's direction are sharply divided along partisan lines. Almost eight-in-ten (79%) supporters of Erdogan's AKP are satisfied with the current direction of the country, while only 22% among the largest opposition CHP agree.

[...]

"There are also divisions on country direction by age, education level and devoutness. Older and more educated Turks, as well as Turkish Muslims who pray 5 times per day or more, are happier with the direction of their country than younger, less educated and less devout Turks."

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