Tags: Bremmer | oil | Putin | West

Eurasia Group's Bremmer: Oil Slump Gives Putin 'Need to Get More Aggressive'

By    |   Tuesday, 02 December 2014 03:22 PM

The dive in oil prices to a five-year low will make Russian President Vladimir Putin even more aggressive in his confrontation against the West, says Ian Bremmer, president of consulting firm Eurasia Group.

U.S. oil prices dropped to their nadir of $63.72 a barrel Monday before rebounding to $66.88 Tuesday.

The plunge creates a "need for him [Putin] to get more aggressive," Bremmer told CNBC.

"He's going to be emboldened simply because he's gone all in on an anti-U.S. [policy], and he must keep Ukraine nationalist engagement. This is what's behind all of his approval ratings. It's behind who he is now as a leader."

Energy is Russia's biggest industry, accounting for about 25 percent of GDP.

"Backing down against the West and the West's threats of sanctions, the threats of isolation is something that is completely inconceivable for Putin domestically," Bremmer said.

"Lower oil prices simply squeeze him harder, push him further into a corner. He feels he has to fight as a consequence."

Meanwhile, Henry To, chief investment officer at CB Capital Partners, thinks the dynamic of sluggish oil demand and surging output that has depressed prices will reverse next year, pushing oil prices higher.

He offers three reasons why in an article for MarketWatch:
  • With Brent crude priced below $70 a barrel, global oil production will slide. In the United States, "with the recent decline in oil prices, shale oil producers will struggle to find fresh lenders willing to underwrite their growth plans," To writes.
  • "U.S. oil demand will surprise on the upside in 2015, with Brent below $70 a barrel." Because gasoline is getting cheaper, more people are traveling by car.
  • "The European Central Bank's 1 trillion euro quantitative easing will support oil prices" by boosting demand.
Brent traded at $71 Tuesday, and To sees it averaging $80 in 2015.

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The dive in oil prices to a five-year low will make Russian President Vladimir Putin even more aggressive in his confrontation against the West, says Ian Bremmer, president of consulting firm Eurasia Group.
Bremmer, oil, Putin, West
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2014-22-02
Tuesday, 02 December 2014 03:22 PM
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