Moscow cannot be allowed to destabilize oil markets ahead of the U.S. presidential election
Democracies should counteract Putin’s attempts to raise fuel prices ahead of November
Vladimir Putin will intervene in oil markets to influence the upcoming U.S. election. Democracies must counteract Putin’s electoral interference schemes by ramping up energy production and, where appropriate, releasing inventories to ensure that consumer fuel prices remain stable.
Putin intends to constrain Western support for Ukraine and weaken the transatlantic alliance by influencing the results of the upcoming U.S. election.
While Moscow’s geopolitical stakes in the U.S. election are substantial, the Kremlin’s economic interests are also considerable – yet often underestimated.
Depending on the outcome of the election, the U.S. could relax economic and financial pressure on Russia, while tightening sanctions on Venezuela and Iran. Furthermore, the election could lead to a major reduction in U.S. uptake of electric vehicles and renewables, slowing global clean energy deployment. These outcomes would be highly favorable for Russia’s hydrocarbon exports.
Putin has the geopolitical and economic motives to interfere in U.S. elections. He also has the means.
In addition to artificial intelligence-enabled disinformation, Vladimir Putin will attempt to influence Western elections via energy markets.
Putin has played this game many times. He helped engineer oil production cuts in 2016 and 2022 just ahead of US elections, raising oil prices and harming incumbent candidates. Moscow also successfully pushed global volumes higher in the fall of 2018, diminishing anti-incumbency sentiment.
While difficult to quantify, the effects of Putin’s oil market machinations on U.S. elections have likely been substantial.
Gasoline is a major economic and political determinant in the United States, with research from MIT showing that U.S. consumer sentiment falls as gasoline prices rise.
The numbers show why. The U.S. consumed 370 million gallons of finished motor gasoline (also known as petrol) every day in 2022, or about 4 liters per day per person.
For context, total EU diesel and petrol per capita consumption stands at about 60 percent of U.S. petrol demand alone.
If history is any guide, Putin will once again cut crude oil output in a bid to spike politically sensitive consumer fuel prices before the U.S. presidential election in November.
Since many voters – especially swing voters – are motivated primarily by personal living standards, not ideological or normative concerns, another last-minute oil production cut engineered by the Kremlin ahead of the November U.S. election could determine the result.
Putin has several levers to raise energy costs. The Kremlin will likely reinstate its September 2023 ban of diesel and gasoline exports ahead of U.S. elections. Indeed, Moscow has recently imposed a six-month ban on gasoline exports that started on March 1st. Also probable is another mass disruption of Kazakhstani oil exports, 80 percent of which must reach market via Russia’s Novorossiysk terminal. Finally, Putin will pressure OPEC to cut production.
Democracies must prepare their own responses.
The U.S. and other democracies should attempt to maximize short-term energy output – including hydrocarbons – via domestic production. Since Russia seeks output cuts in tandem with OPEC, adroit diplomacy with the oil cartel will also prove critical.
European countries should also consider refilling strategic petroleum reserves now, when prices are relatively low, as committing to fill reserves will incentivize near-term production.
Some countries may be able to purchase oil and store the volumes in the U.S. Strategic Petroleum Reserve.
Furthermore, democracies should anticipate reserve releases beginning in September or October, as Putin will squeeze markets just before the election.
Neutralizing Putin’s oil weapon via greater near-term hydrocarbon production will rankle some. But the greater threat to the environment is allowing Vladimir Putin to interfere in energy markets and Western politics unimpeded, as electoral outcomes will determine climate’s trajectory.
Additionally, some skeptics in the West will denounce any effort by democracies to stabilize energy prices before the U.S. election and claim that foreigners are meddling in American affairs. Yet many of these same figures are curiously quiet about Moscow’s own electoral interference schemes.
While democracies should not interfere in one another’s elections, neither should they stand aside as Moscow attempts to anoint its preferred opponents by destabilizing energy markets. To counteract Russian interference, democracies should expand energy production as much as possible in the near term while preparing for strategic releases of crude oil and crude products in the fall of 2024.
Joseph Webster is a senior fellow at the Atlantic Council and edits the independent China-Russia Report. This article represents his own personal opinions.