Peter Hoskin

What price oil?

As Morus writes in an excellent post over at Political Betting, the escalation of the conflict in Georgia will cause more than a few headaches for Western policymakers.  Most of their worries will centre around the Baku-Tbilisi-Ceyhan (BTC) pipeline – a pipeline which carries oil from the Caspian Sea to Turkey, from where it is shipped out to Western Europe and the US.  Problem is, that pipeline runs through Georgia – at points, it’s only 55km away from the South Ossetia region where much of the fighting is concentrated.  The Russians are certainly bombing in its vicinity, and the Georgians are claiming that the pipeline has been deliberately targeted, although not yet hit.

But the main worry isn’t that the pipeline might be partially destroyed.  In geopolitical terms, that would be little more than an inconvenience – simply put, the pipe could always be fixed again.  No, the main worry is that the conflict escalates to the point where Russian forces – or even Georgian separatists – gain sustained control of major parts of the pipeline.  In that case, Moscow would effectively have control of a significant portion of the West’s oil supply.  One likely result of that would be another rise in oil prices.  But another could be a further cooling in relations between Russia and the West.  Russia is asserting itself more and more on the world stage, and one feels it wouldn’t shy away from playing politics with the BTC pipeline, given the chance.

Whether all this factored into the Russian decision to move into South Ossetia is unclear.  But it does mean that there could come a point at which Western nations feel the need to act, to protect their interests.  And who yet knows what that would mean, or how it would play out?

P.S. Do read Mark Almond’s Guardian article on the struggle.

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