Vladimir Putin has exposed his worry over a weakness in Russia’s economy.
The President is thought to be concerned over the effect that lower oil prices would have on his domestic position as well as Russia’s ability to wage war in Ukraine.
It comes after US President Donald Trump said on January 23 that oil prices are currently “high enough” so that Russia can continue its war effort in Ukraine.
He also called for Organization of Petroleum Exporting Countries (OPEC) states to “bring down the cost of oil”, the Institute for the Study of War (ISW) reports.
This would decrease Russia’s capabilities on the battlefield and could “end the war”.
Putin responded to Mr Trump during an interview on January 24. The Russian President claimed that his country and the US are both large oil producers and consumers.
He added that “too high prices are bad” for both economies, claiming that Russia and the US rely on energy resources for domestic industries, and that “too low prices” would undermine energy companies’ investment opportunities.
The ISW added: “Putin attempted to portray the more modern and diversified US economy as operating similarly to that of Russia,which is a petrostate that heavily relies on revenues from energy exports.
“Falling oil prices would decrease Russia’s federal budget revenues and risk destabilizing the Russian regime’s stability while also reducing Russia’s share of the global oil market and economic influence on the global stage.”
“Putin’s emphasis on the need to maintain prices for the sake of energy companies’ investments also demonstrates the extent to which Putin feels it necessary to cater to the elite in his inner circle who have personal interests in the energy sector.
“Putin’s focus on his inner circle’s interests contrasts with US leaders’ larger focus on the general voting population and a broader array of business interests, which benefit from lower energy prices.
“Putin’s attempt to portray lower oil prices as against US interests suggests that Putin is afraid of the harm such policies would cause Russia and is trying to persuade Trump to abandon these proposals without having to concede to Trump’s insistence on meaningful negotiations to end the war.”
Earlier this month, Russian state-owned energy firm Gazprom acknowledged that it is considering reducing the size of its central office staff by 40 %.
Expersts suggests that this indicates that the company “may be concerned about the long-term effects that the war in Ukraine and the reduction in Russian gas exports to Europe will have on the Russian gas industry”.
