Trump's oil price plan aims to pressure Kremlin on Ukraine
The US President has limited options to pressure the Kremlin to end the war. Analysts believe that the primary viable strategy is to continue supporting Ukraine with armaments. For over a week, there has been an exchange of views between the leaders of Russia and the United States, including participation from Ukraine's President, Volodymyr Zelensky.
Speaking at the World Economic Forum in Davos, Donald Trump suggested that "If the price came down, the Russia-Ukraine war would end immediately." He also said he would negotiate with Saudi Arabia and OPEC to lower oil prices.
Saudi Arabia's budget anticipates a large deficit, and its public debt is nearly 30% of its GDP. Unlike the late USSR, which succumbed to Saudi oil dumping, the Saudis need oil prices to be at least $98 per barrel to balance their budget, explains one Russian analyst.
Trump seems to suggest that he might attempt to replicate Ronald Reagan's strategy of bankrupting the USSR by lowering global oil prices. However, the current global situation is much more complex.
The Saudis are not only implementing an ambitious investment plan that strains their budget, but they are also cooperating militarily with Russia. After the outbreak of the war in Ukraine, Riyadh received dozens of Pantsir-1 air defense systems from Moscow. Although these were needed by the Russian army at the front, the Kremlin decided it was better to invest in maintaining good relations with the Saudi regime.
Ineffective threats
The Kremlin does not respond to Trump's threats. As Russian Deputy Foreign Minister Aleksandr Grushko notes, "And will not only seek ironclad international guarantees that will prevent Ukraine’s membership in NATO in any form, but we will also insist it will become a policy of the alliance itself." This concerns obtaining guarantees that Ukraine will not join NATO.
Carnegie Foundation expert Tatiana Stanovaya commented, “welcome again to the turn of 2021 and 2022," pointing to Putin's repetition of demands from late 2021 regarding the future security architecture in Europe, based on two key principles: no Ukraine in NATO and no NATO in Ukraine.
Putin's tactics have shifted: instead of issuing a sharp ultimatum, he focuses on softening Trump's stance and appealing to his ambitions. It is also notable that Putin publicly supported Trump's claim of the "stolen" 2020 elections, causing outrage among the Russian opposition.
What will NATO do?
President Zelensky proposes that NATO send peacekeeping forces to Ukraine after military operations end. Foreign Policy notes that the Alliance has two options: provide Ukraine with long-term financial and military support or extend Article 5 guarantees of its treaty to Ukraine. The Kremlin strongly opposes both options.
It is still uncertain how a truce could be reached. Kyiv expects fighting to cease at the pre-aggression borders as of February 24, 2022, while Putin claims the war's objectives have already been achieved, including weakening the Ukrainian army and securing a "land corridor to Crimea." For Zelensky's demands to be met, the Kremlin would have to relinquish this "corridor."
So far, neither side has shown a willingness to compromise. Trump has limited the U.S.'s foreign aid, which does not include military support for Ukraine. Meanwhile, Washington continues to exert energy pressure on Russia. General Keith Kellog, Trump's special envoy for Ukraine, believes lowering the price of oil to $45 per barrel could weaken Russia's financial resilience and force the Kremlin to seek an agreement.
However, Timothy Ash of Chatham House noted that a prolonged war won't significantly harm Trump. At the same time, as the conflict drags on, Putin will find it increasingly difficult to sustain the situation.
