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Energy Insights: Energy News: Putin's Syria strikes are a long-term play for higher oil prices

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Putin's Syria strikes are a long-term play for higher oil prices



How the Russian presidentís real aims are securing both energy markets and his reputation back home

Vladimir Putin plays ice hockey on his 63rd birthday on 7 October.
Vladimir Putin plays ice hockey on his 63rd birthday on 7 October. Photograph: Sasha Mordovets/Getty Images

Russian airstrikes in Syria, the first launched by Moscow outside the former Soviet Union since 1979, have set the tone for whatís to come. The escalating attacks have mainly targeted moderate, western-backed rebels. Civilians have also been hit, while Russian jets have twice violated Turkish airspace.

These immediate transgressions have shown that Putin, as always, will go his own way in this war. He will draw on as much of his military strength as he needs to, he will use indiscriminate force, and he will bully and intimidate the westís regional allies.

In short, Putin will stop at nothing in pursuit of his goals and the international community needs to understand exactly what those goals are. Putinís game is bigger than many commentators currently realise.

Yes, this is about Russiaís international standing, but more importantly it is also a long-term play for higher oil prices and, ultimately, a flow of oil dollars into Russia to strengthen his popularity at home.

The international aspect is relatively transparent. Putin has to prop up his ally and force his way back in from the cold on the global stage. Syria is home to Russiaís only naval base in the Middle East and has long been a buyer of Russian arms and a supplier of regional intelligence.

More importantly, however, he cannot be seen to stand by and allow Assad to fall. He needs to show the US and the world that he will not retreat from the position he staked out at the start of the conflict.

By wading into such a complicated international situation, he is also deflecting attention from Ukraine and weaving a new narrative for himself. Putin is now the bold peacekeeper, leading the charge against terrorism ahead of a hesitant US and earning a renewed place at the top table.

Whether they like it or not, western leaders now have to talk to him again. He can risk Russian lives without losing political capital at home, and can point to this sacrifice to leverage a blind eye towards continued aggression in Ukraine.

Of course Russia will also target Islamic State. The territory currently held by Isis contains important oil assets and Putin will be eager to bring these under his control. He can then play the ďgodfatherĒ, dispensing cheap oil from previously Isis-held areas to his allies in the region.

Which brings us back to his primary aim. The more he can entrench himself in the Middle East, the more he can exert control over energy markets. With Iran and Iraq in his sphere he can begin to force Europe to rely on him again for supplies.

Prolonged war in the Middle East would serve Putinís interests perfectly. The deeper and more widespread the conflict, the more world oil and gas prices are likely to rise, helping him stage an economic recovery at home and render the sanctions useless.

Ushering in better times at home is therefore Putinís ultimate aim as he seeks to prop up a system that takes advantage of peopleís patriotism and public spirit. The grand plan is for his vital oil and gas revenues to recover so he can buy the loyalty of Russiaís 140 million-strong population.

Alexander Temerko is a Ukrainian-born British businessman in the oil industry and donor to the Tory party

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