As Russia pushes to find new buyers for its oil to skirt ever tougher Western sanctions, it is cutting into the market share of two of its allies — Iran and Venezuela — and setting off a price war that could hurt them all.
The competition for sales to Asia has already forced Venezuela and Iran to sharply discount their crude to try to hang onto the few available outlets for their own sanctioned exports, according to oil analysts and traders.
And although both Iran and Venezuela publicly remain close to Russia, experts expect that if the oil battle intensifies it will raise tensions with the Kremlin even as its leader, Vladimir V. Putin, is working to shore up his alliances. On Tuesday, his government announced he would make a rare trip outside the country next week to Tehran.
The oil competition set off by Russia’s invasion of Ukraine already appears to be pushing Venezuela a bit closer to the West after years of a deep freeze in relations over electoral and human rights abuses by the country’s authoritarian leader. U.S. officials and at least one American energy company have been reported to be in talks with the Venezuelans.
Any possible deal to bring more Venezuelan crude onto world markets would help the United States, which is increasingly desperate to bring oil prices down to try to limit the damage to Western economies from the war and from sanctions imposed on Russian oil. The economic fallout is whittling away at support for Ukraine in its struggle against its larger and richer neighbor.
“The war shows that countries have interests, not enemies or friends,” said Francisco Monaldi, a Venezuelan oil politics expert at Rice University in Houston.
The spike in energy prices caused by Russia’s invasion has given fossil fuels the prominence they last enjoyed in the 1970s, amplifying the impact of the Kremlin’s policies far beyond the battlefields of eastern Ukraine at a time when many world leaders hoped to begin phasing out oil to tame climate change.
The energy crisis is unraveling the last vestiges of the post-Cold War global order, heralding a new era of great power competition in an increasingly fragmented world, said Daniel Yergin, a prominent energy expert and author of “The New Map: Energy, Climate, and the Clash of Nations.”
“Oil,” he said, “is central to the outcome of this new struggle.”