Trump and geopolitical irony

The customs war launched by Trump has unexpectedly brought a new trump card for Ukraine. Oil prices have dropped to a critical level for Russia. The estimated price for the Russian budget is $70 per barrel, and today it is about $50. Of course, there will still be fluctuations, but the worst news for the Kremlin is that the expectation of a global recession is not just inevitable. The main thing is — no one knows when the economic chaos launched from the White House will end.

Trump intends to negotiate with each country individually. Moreover, as he himself says, each country will also be presented with political demands. Can you imagine how much time all these negotiations will take? And how much time will it take to establish new economic chains from producer to consumer after new rules are set?

"Therefore, even the optimistic scenario of Trump’s new world, according to which “everyone can be negotiated with,” implies a global economic downturn without any understanding of when the light at the end of the tunnel will appear. In fact, even a tariff quarrel just between the two largest economies — Russia and China — is enough reason for oil prices to hit rock bottom."

But unexpectedly, another factor has been added — the decision by OPEC to increase oil production. The decision seems illogical from the perspective of OPEC members’ interests. But maybe it is logical, because the cost of oil production, for example in Saudi Arabia, is only $10 per barrel, so to increase profits they can just keep pumping.

A political game by Washington is not excluded either. After all, Riyadh has long wanted to undermine the potential of Iran — Saudi Arabia’s regional competitor — with the help of the Americans.

That is why oil market experts are giving very disappointing news for Russia’s gas station economy. According to forecasts by Goldman Sachs, the price of a barrel of oil will be $62–58 by the end of 2025, and $51 by December 2026.

And this is still without any active American policy aimed at restricting trade in Russian oil. And those may still come. It’s worth recalling Kellogg’s threats that the U.S. may block the transit of illegal Russian oil, which, according to him, goes 70% through the Baltics, and the bipartisan Senate bill proposing a 500% tariff on countries buying Russian oil if Putin fails in peace talks with Trump.

"It turns out to be a sort of geopolitical irony — the fall in oil prices due to Trump’s tariffs may be a greater evil for Russia than all of Biden’s sanctions."

All this will push Putin to continue peace talks with Trump. Moscow remembers well that the USSR once collapsed not because of sanctions, but because the militarized Soviet economy stopped receiving petrodollars.

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About the author: Serhii Taran, political scientist.

The editorial team does not always share the views expressed by blog authors.