Ukraine war at an oil turning point

Is it a global market game changer? If Ukrainian attacks on Russian oil facilities continue and escalate, Moscow could lose much of its export capacity. This might cripple its war efforts and could have a far greater impact on the market.

India, Turkey and possibly even China would need to diversify their supply chains. Meanwhile, alternative suppliers are shrinking. The US also blacklists Iran and Venezuela. Iran faces the threat of a new attack from Israel, and a strong US fleet is off the Venezuelan coast, threatening to overthrow the anti-American Caracas regime.

America, already a significant oil and gas producer thanks to its new fracking technology, could then expand its oil markets. Many US allies are already required to buy US arms to upgrade their arsenal and are urged to buy American oil to replace Russian oil.

Beyond the intentions of any leaders, like US President Donald Trump or Russian President Vladimir Putin, this perspective shifts the dynamics of the conflict. 

So far, the US has viewed the war as a threat to its economy. It has been a significant expense in the effort to hold back an adversary, Russia, which endangers historic European allies, but remains well outside American strategic priorities.

However, the oil angle could be a silver lining for American industry, boosting US oil production and processing capabilities. The US oil industry may have a vested interest in defending Ukraine against Russia and undermining Russia’s energy sector.

If so, this could mark a significant turning point in the war. Kyiv might receive greater and better support, potentially shifting the war in its favor.

Beyond what happens on the front lines, the Russian economy could collapse, and China may face a difficult choice: continue supporting Russia and pressure its already strained economy, or abandon Moscow to its fate. It’s unlikely that the China-Russia relationship will break, but this new development could test it and cause tension.

Beijing is resourceful and inventive and could develop a third or even fourth option. Yet the current crossroads present new and challenging political scenarios for both Russia and China.

This ripple effect also extends to Iran and Venezuela. If their ‘big brothers’ struggle, their own situations could become even more difficult. This is especially true for Venezuela, where the regime is already faltering.

These growing concerns might help explain the recent surge in provocative Russian actions. Drones and aircraft have entered NATO and US airspace, and hybrid attacks involving cyber operations have occurred across Europe. 

The threat of a sudden Russian escalation could indicate that Moscow is gearing up for a larger conflict with NATO, where some members are notably unprepared and hesitant to deploy their forces. The implied message might be to curb Ukraine’s long-range missile and drone attacks. 

It’s uncertain how Europe or NATO will respond, whether by strengthening their defense measures or hesitating. Regardless, the Ukraine war has intensified, bringing a stark new challenge: confront Russia or concede. This situation also tightens China’s options, leaving even less room for political flexibility.

This could also signal a real strategic weakness for Russia. At the same time, it might create an opportunity for a hybrid Russian effort targeting those NATO countries hesitant to oppose Russia. 

Italy could be an easy target. It is one of the three largest economies in the EU, with two openly pro-Russian parties—one in the government, Lega, and one in the opposition, the Five Star Movement (M5S). In recent days, there have been significant and violent pro-Palestinian protests. Pro-Palestinian activists in Italy are often also pro-Russian.

This article first appeared on Appia Institute and is republished with permission.