Will the oil prices keep up even if there’s no war in Ukraine?

Recently we’ve seen headlines all across the globe shouting about how Russia is preparing to invade Ukraine, this is actually a very serious matter since invasions of other countries aren’t a very casual thing any more. Maybe 200-400 years ago countries would invade each other to commit their part of the conflict, but today it’s more common to do it through other ways like raising energy prices or creating trade tensions like the infamous China versus America trade war. Regardless, even tho Russia officially declared a drawback of its troops, this event caused a lot more damage than we could realize.

Why did Putin want to invade Ukraine in the first place?

This is a very complex question and of course, it has to do with power. But Putin could’ve invaded any country, so why Ukraine? Well, there’re a number of reasons but the first and most obvious one is that Ukraine was actually the last state to be declared independent from the Soviet state. Ever since the fall of the Soviet state, Russia has always looked for a reason to invade Ukraine. In 2014 they took over Crimea, the half-island which was a part of Ukraine and now officially a part of the Russian state. Also, Ukraine is a very well positioned country for Putin to control since it’s located near the black sea it gives Russia a comparative advantage in trade with more countries. Today, Russia is a very isolated country since because of their location they can’t transport anything through shipping which is the cheapest way to transport goods today. This move would essentially make him more influential in Europe.

But the real reason Putin can’t let Ukraine go is that he genuinely believes that the fall of the Soviet state is the greatest collapse of a state to be made. He wants to reestablish the Soviet state, not like the old one where the government controlled everything but instead a large country like today’s Russia. It would make sure he had a strong military presence in Europe, which is the next reason why he wants to invade Ukraine.

Sanctions will become useless unless…

Sanctions will be much harder to impose on Russia if they succeed with their invasion, as I mentioned earlier Ukraine is a very strategic location for Russia to use in terms of trade. If they succeed, European trade sanctions will be pretty useless against Russia. This is very dangerous since it will open up for Russia to essentially become a superpower on its own, today we have superpowers that consist of multiple countries like the European Union, North America etc.

Russia has also been very effective in establishing the right partnerships, Russia and China is the most famous one since it’s also the most dangerous one. China is today one of the largest trading partners in the world, if every single country decided to put sanctions against Russia it wouldn’t matter since they have China in their pocket. Since China also produces most gods in the world, it would give Russia the opportunity to pretty much do whatever they want to without the fear of embargo.

What role does oil play in this war?

Throughout history, every single successful industrialized nation has one thing in common; high access to some sort of energy source. The most common one is obviously oil, Europe that consists of highly developed nations are very oil-dependent to keep the economies running. Recently, Germany approved the pipeline called Nord Stream 2 which will connect their oil pipelines to Russia making them their supplier of oil-based energy. Because Germany is also a very big country in the middle of Europe, more countries are able to share parts of the Nord Stream pipeline. While it may be efficient for more countries to use the same pipeline, it’ll also make sure Russia is the only oil supplier in Europe.

The southern parts of Europe aren’t able to connect with the Nord Stream pipeline because they’re too far away. This is why Ukraine is so important for Russia, if Putin successfully invades Ukraine he’ll be able to install a new pipeline that will stream through the southern parts of Europe securing a monopoly on energy supply for European countries. Because most of our energy sources are oil, this move will jack up the prices of oil which is good for Russia. This is why they really want to take over Ukraine.

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Published: Tue, 22 Feb 2022 22:39
Author: Robin Babaiy

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