Time To Cut Ties: The Correlation Between High Oil Prices and Russia’s Aggression

As the nation watches the war in Ukraine unfold, many are closely monitoring the response from the United States and its NATO allies. On February 24, 2022, Russia invaded Ukraine, and since then, the countries have been at war over the sovereignty of Ukraine. Ukraine is not a party to NATO; therefore, this has kept the allies from joining the battle itself. However, NATO and the United States, have placed what they hope to be crippling sanctions on Russia. The United States began by sanctioning Russia’s export systems and economy. Specifically, the United States targeted the 10 largest financial systems in Russia, hoping to undercut the ability of Russia to continue its ambitions in Ukraine. NATO then increased pressure on Russia through a united sanction blocking Russia from the SWIFT banking system, which connects some of the largest financial systems worldwide and allows for secure messaging among them. While these sanctions are hoped to seriously impair Russia’s economic capabilities, some are wondering if there is more that can be done in the United States.

            In early February, the United States was importing roughly 8.3 million barrels of oil a day, and around 1 in 12 of those barrels was, and still is, coming from Russia. With such a steady reliance on Russia’s oil exports, and the price of oil rising to nearly $90 a barrel in early February, there seems to be a sweeping correlation between high oil prices and Russia’s aggressive behavior. In 2008, Russia invaded Georgia around the same time that the price of oil was averaging a whopping $119.07 a barrel here in the United States. In 2014, Russia invaded Crimea, ironically around the same time oil prices were reaching a similar average of around $101.61 a barrel here in the United States.

            If there was ever a perfect time for the United States to become energy independent, it is right now. As one of the major exporters of oil worldwide, Russia is reaping the benefit of high oil prices, and at the same time, wreaking havoc in Europe. We do not know how the war in Ukraine will end, but if history continues to repeat itself, Russia will continue its wrath of taking what it wants, when the world is most vulnerable to importing its high-priced oil. The United States should lead by example, bringing energy production back home, and saying no more to Russia’s oil.

Sources:

The White House – FACT SHEET: Joined by Allies and Partners, the United States Imposes Devastating Costs on Russia – February 24, 2022, available at  https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/24/fact-sheet-joined-by-allies-and-partners-the-united-states-imposes-devastating-costs-on-russia/.

USA Today – What is SWIFT? How could banning Russia from the banking system impact the country? – February 26, 2022, available at https://www.usatoday.com/story/money/2022/02/24/swift-russia-banking-system-sanctions/6930931001/.

The New York Times – Why Are Oil Prices So High and Will They Stay That Way? – February 2, 2022, available at https://www.nytimes.com/2022/02/02/business/economy/oil-price.html.

Atlantic Council – The 2008 Russo-Georgian War: Putin’s green light – August 7, 2021, available at ncil.org/blogs/ukrainealert/the-2008-russo-georgian-war-putins-green-light/.

InflationData.com – Historical Crude Oil Prices (Table) – February 10, 2022, available at https://inflationdata.com/articles/inflation-adjusted-prices/historical-crude-oil-prices-table/.

Brookings – Crimea: Six years after illegal annexation – March 17, 2020, available at https://www.brookings.edu/blog/order-from-chaos/2020/03/17/crimea-six-years-after-illegal-annexation/.

Written by Associate Editor: Alexis Telga