Russians, Saudis and OPEC+ output cut
Plus, Brazilian President Jair Bolsonaro lives to fight another day
Hello! I hope you had a great week. In this week’s edition we’re looking at the OPEC+’s decision to cut oil output and its impact, the 2022 Nobel Peace Prize laureates and updates from the Russian invasion of Ukraine. Let’s get started.
This day that year
2001: Less than a month after the September 11 terror attacks, the United States and its allies began their invasion of Afghanistan to take down al-Qaeda and overthrow the Taliban government in Kabul. This was the first phase of American ‘war on terror’.
1949: The German Democratic Republic (East Germany) was formed.
Saudis, Russians and the OPEC output cut
The Organization of the Petroleum Exporting Countries - Plus (OPEC+), which includes Russia and American ally Saudi Arabia, announced on October 5 they’ll cut oil production by two million barrels a day starting November. This is the largest cut since the beginning of the COVID-19 pandemic and will likely lead to a rise in global oil prices. Higher prices will benefit these oil-producing countries.
OPEC and the OPEC+ are mighty. OPEC+ accounts for roughly 45 percent of global crude production, and by current estimates, 80.4 percent of the world’s proven oil reserves are located in OPEC member states. OPEC+ — often described as a supply cartel — justified the decision saying it wants to stabilise prices, which have fallen in the past couple of months on account of a slowing global economy. Saudi Energy Minister Prince Abdulaziz bin Salman denied that his country is weaponising oil prices. “Show me where is the act of belligerence.”
But the United States isn’t convinced. Washington DC has criticised this step — taken by an organisation dominated by its ally Saudi Arabia — for being “shortsighted”, suggesting that it plays into the hands of Moscow. “At a time when maintaining a global supply of energy is of paramount importance, this decision will have the most negative impact on lower- and middle-income countries that are already reeling from elevated energy prices [because of the Russian invasion of Ukraine],” US’ National Security Advisor Jake Sullivan and National Economic Council Director Brian Deese said in a statement. White House Spokesperson Karine Jean-Pierre told reporters that it was “clear” that OPEC+ was “aligning with Russia”. OPEC+’s decision also disrupts American efforts to introduce a price cap on Russian oil. The US believes that such a cap would limit money entering Russia and being used for military purposes. Some analysts suggest that the oil production cut which will lead to higher oil prices is OPEC’s way of expressing disapproval of this price cap the West was trying to introduce. Meanwhile, the Kremlin, perhaps, would be hoping that higher oil prices would now make it difficult for the West to extend energy sanctions currently stacked against Russia.
This strengthening Saudi Arabia-Russia alignment, as seen in this situation, is a cause of concern for the US. The US and the European nations wanted oil production to be increased. To this end, US President Joe Biden had — making a U-turn on his promise of turning Saudi Arabia into a pariah state over the Jamal Khashoggi murder case — travelled to the kingdom in July to meet Crown Prince Mohammed bin Salman. He walked away empty handed, observers suggest. An increase in oil prices at this moment is also detrimental to the prospects of Biden’s Democratic Party in next month’s crucial mid-term elections in the US.
Read more — ‘Putin and the prince: fears in West as Russia and Saudi Arabia deepen ties’ by The Guardian's Martin Chulov
Finding a quick fix
To meet the challenge, the US will continue to release oil from its strategic reserves to keep the price low. Washington DC is also working to ease long-standing sanctions against Venezuela (an OPEC member) and the authoritarian regime in Caracas so as to allow American energy giants like Chevron to resume pumping oil there and restart export of oil from the South American country to Europe and the US, the Wall Street Journal reported. Additionally, at a time when Europe is working to replace Russian gas supplies before winter, a possible rapprochement between Washington DC and Caracas leading to even a basic offshore gas deal would help, the WSJ report highlights.
The Biden administration is also reportedly expediting an anti-cartel legislation (called the No Oil Producing and Exporting Cartels Act, or “NOPEC”) aimed at curtailing OPEC’s control of energy prices.
Read more: ‘The Saudi-Russian Oil Axis Snubs Biden With Production Cuts’ (opinion) by Bloomberg’s Javier Blas
What else?
Nobel Peace Prize
The 2022 Nobel Peace Prize was awarded to Belarusian human rights advocate Ales Bialiatski (detained without trial), Russian human rights organisation Memorial and Ukrainian human rights organisation Center for Civil Liberties.
The Norwegian Nobel Committee said these Peace Prize laureates “have for many years promoted the right to criticise power and protect the fundamental rights of citizens”. “They have made an outstanding effort to document war crimes, human right abuses and the abuse of power. Together they demonstrate the significance of civil society for peace and democracy,” the committee said.
The committee’s full justification for awarding them the Peace Prize can be read here.
In 2021, journalists Dmitry Muratov and Maria Ressa were awarded the prize “for their efforts to safeguard freedom of expression, which is a precondition for democracy and lasting peace”.
Bolsonaro lives to fight another day
Brazilian President Jair Bolsonaro sprung a surprise last weekend by picking up enough votes to deny his rival Luiz Inácio Lula da Silva a straight-forward victory in the country’s presidential election. Lula secured 48.4 percent of the valid votes. But, with 43.2 percent of the votes to his name, Bolsonaro performed better than what most opinion surveys had suggested. A second round of polling (with only those two as the candidates) has been necessitated as no candidate reached the 50-percent vote-share. Lula is leading head-to-head against Bolsonaro and is likely to win the round scheduled for October 30, opinion polls predict. But there are concerns that Bolsonaro might do a Trump or attempt a self-coup knowing that he faces defeat. Or, he may obstruct the smooth transfer of power if he loses.
Meanwhile, Bolsonaro’s party defeated the Lula-led alliance in the elections for the Senate and the Chamber of Deputies — the two Houses of parliament.
What are our borders?
Russian President Vladimir Putin formalised the annexation of four Ukrainian regions on October 5 even as his military faced setbacks on the ground. The Ukrainian forces recaptured the strategic town of Lyman following a Russian retreat there.
Putin also signed a decree ordering his government to seize control of Ukraine’s Zaporizhzhia nuclear power plant — the biggest in Europe — and make it a “federal property”.
As recently as October 3, the Kremlin was still figuring out which areas of occupied Ukraine it has “annexed”, suggesting that Moscow doesn’t quite know where Russia’s claimed international borders are.
Read more: ‘Opinion | Putin is becoming more desperate. Could he use a nuclear weapon?’ by Ian Bremmer
Interesting stuff
Aaron David Miller discusses with Andrew Weiss, Eugene Rumer and Kadri Liik the “a new and more dangerous phase” of warfare in eastern Ukraine, in this podcast episode. They make some interesting observations about the Ukrainian counteroffensive, Putin’s recent “annexations” and the likelihood of more Russians getting conscripted to fight the war. Listen to the Carnegie Connects podcast episode here.
Bloomberg’s Chris Kay explains how Altaf Hussain, Pakistan’s most feared power broker, controlled Karachi from his British exile in London. Read the full story here.
“A public that mistakenly thinks a military victory is a foregone conclusion for India presses the government to go further in its optics to keep that expectation alive, creating conditions for bigger blunders.” Sushant Singh, a senior fellow at the Centre for Policy Research, writes in The Caravan about how China outmanoeuvred the Indian government and seized control of territory along the Line of Actual Control in the Himalayas. Read the piece here.
“Germany must anticipate and plan for possible instability in the United States after the 2024 presidential election. Working through and with the EU, Berlin must strengthen the transatlantic alliance so that it cannot be broken, even under another Trump-like US administration.” Peter Wittig, former German ambassador to the US, writes in Foreign Affairs about what Germany and other European nations can do to “Trump-proof” the trans-Atlantic relationship. Read the full piece here.
Before you go… If you haven’t already, do ‘follow’ us on Twitter and Instagram.
I always look forward to your feedback. You can comment below or send a quick email to untwinednewsletter@gmail.com.