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Vladimir Putin and the price of oil– did he conspire with the Arabs to jack up crude oil prices from 2000-2008?


As I noted in my previous post, the rise of Vladimir Putin to Russia’s presidency was followed by dramatic increases in the price of crude oil– increases that benefitted Russia’s gross domestic product (GDP) and helped raise many Russians from the countrywide depression after the dissolution of the Soviet Union (USSR.)

Putin’s presidency coincided with a dramatic rise in the price of crude oil.

There is no definite evidence that links Putin’s presidency to rises in the price of crude oil. The fact that the price of crude oil did increase from a nadir of $11.22 a barrel (for West Texas Intermediate, as an average quality of oil) in November 1998 to $25.74 in April 2000. Putin was elected president in March 2000. The price steadily increased for eight years, peaking at $140 in June 2008. After collapsing by half in the Great Recession of 2008, the price recovered to nearly $100 a barrel for several years.

After Russia took over Crimea and invaded Ukraine in 2014, US and European allies of Ukraine sanctioned the Russian government. The price of crude oil collapsed again, eventually falling to $33.62 in January 2016. Once again, the price recovered to $74.15 by June 2018. The pandemic caused another collapse, bottoming out at $18.84 in April 2020. The price has now recovered to $45 as of November 2020.

Ancient History (the Soviet Union, Egypt, and Syria)

The Soviets were allied to the Arabs throughout the long conflict between the Arab states and Israel. USSR did recognize Israel immediately when it was established, but soon became disillusioned with the Israelis because of their embrace of capitalism and the United States. When Egypt and Syria attacked Israel in October 1973 (the Yom Kippur war), the Organization of Arabian Petroleum Exporting Countries (OAPEC) started a boycott cutting off the flow of crude oil to the United States and other Israeli allies. The price of oil quadrupled in a few months, from roughly $3 a barrel to $12.

The Americans provided military supplies to Israel to replace materiel that had been lost in combat and the Soviets began to send military supplies to Syria and Egypt. OPEC (the Organization of Oil Exporting Countries) instituted a cut in production, initially 5%, then increasing to 25% after the war ended. This caused a global recession and tension between the US and its European allies.

The oil embargo lasted from October 1973 to March 1974. It failed to force the Israelis to withdraw to their 1949 borders, but the embargo, price increase, and production decrease induced a dramatic shift in economic factors and was associated with severe inflation in the United States. According to Wikipedia, “Over the long term, the oil embargo changed the nature of policy in the West towards increased exploration, alternative energy research, energy conservation and more restrictive monetary policy to better fight inflation.”

Modern History– the fall of the Soviet Union and the chaos of early “Republican” Russia.

On June 12, 1990, the Congress of People’s Deputies adopted the Declaration of State Sovereignty that essentially dissolved the USSR and re-established the Federation of Russian Socialist Republics. A coup de-etat against Gorbachev followed in August 1991, which failed to re-established Soviet control. The heads of Russia, Ukraine, and Belarus signed the Belevezha Accords on December 8, 1991, which agreed to dissolve the USSR and establish the Commonwealth of Independent States.

On December 25, 1991, Mikhail Gorbachev resigned as president of the Soviet Union and general secretary of the Communist Party, and on December 26, the Soviet red flag was lowered over the Kremlin Senate. On the same day, the Soviet of the Republics formally dissolved the Soviet Union.

The Constitution of the Russian Federation was revised repeatedly over the next three years to reflect a transition to “democracy, private property, and market economy” (Wikipedia.) In 1993, turmoil and riots erupted as the parliament and Boris Yeltsin struggled to control the country and referenda were held. Open combat between pro-Yeltsin and anti-Yeltsin forces at the parliament broke out in the fall. Yeltsin eventually won out and retained the presidency until December 31, 1999.

The gross domestic product (GDP) dropped precipitously, and average Russian personal income dropped as well. In 1992-94, the GDP fell 14.5%, 8.7%, and 12.7%. Overall, the Russian GDP fell about 40% in the years 1990-2000.

President George HW Bush and Mikhail Gorbachev met at the Malta summit and on December 3, 1989, President Bush declared the Cold War to be over.

During the 1990’s Russia’s state assets were sold off to private parties, often for pennies on the dollar. These sales resulted in the rise of people known as “oligarchs”, who had suddenly become rich in part through the control of formerly Soviet factory, real estate, and other fixed assets. The appearance of open wealth in Russia contrasted with the impoverishment of many and the loss of Soviet state support for the people.

For example, health services for the public lost most of their funding and private medical facilities that claimed to provide better care became prominent. The mortality rate rose dramatically, and life expectancy dropped. Diseases related to alcoholism increased from an already high rate in the Soviet Union. As president, Putin attempted to reverse the loss of public health funding, with much success until 2014.

Vladimir Putin and foreign relations between Russia and the US, as well as Ukraine

Relations between Russia and the US remained warm after Gorbachev and through the Yeltsin presidency. The Russians became suspicious of US intentions because of the US support of NATO’s eastward movements in the late 1990s. Putin’s rise to power coincided with resumption of Russian espionage work against the US. Tensions resurfaced when NATO, led by the US, took military action against Serbia and Montenegro over the independence of Kosovo in March 1999. In September of the same year, Russia invaded Chechnya, starting the second Chechen war and provoking US condemnation.

Putin took a more assertive stance in foreign relations, starting with the attack on Chechnya. The Russians correctly blamed US actors for supporting the “color revolutions” (the Rose Revolution in Georgia in 2003 and the Orange Revolution in Ukraine  in 2004) which were felt to be interference in Russian affairs (Georgia and Ukraine had been part of the Soviet Union until 1991.)

Putin’s revanchist attitude eventually resulted in direct interference in Ukraine. A pro-Russian government, led by Dmitri Yanukovitch, took power in Ukraine in 2004 in rigged elections. The opposition, led by Victor Yuschchenko and Yulia Timoshenko, took power in the Orange Revolution but Mr. Yanukovitch remained in opposition. Mr. Yuschchenko was poisoned with dioxin (TCDD) and became gravely ill. He eventually recovered; the prevalence of attempted assassinations and poisonings perpetrated on Kremlin opponents (like Alexei Navalny, as well as those who were in the way, like Yassir Arafat) has been noted before.

Mr. Yanukovitch eventually regained power in 2010, with the help of an American political consultant, Paul Manafort, who was paid millions of dollars for his assistance. Mr. Manafort was later employed in the 2016 presidential election in the US, but was forced to step down after his involvement in Ukraine was publicized.

Why all this irrelevant history about Putin and Russia? What about the price of oil?

There is no direct evidence linking the presidency of Vladimir Putin and the rise in crude oil prices from 1999 through 2008– or later. We can only say that it was fortunate for Russia that prices did go up, and that Putin was in a position to find a way to raise oil prices through his control of the Russian government.

Putin’s government includes the foreign intelligence services (SVR) and the main intelligence directorate (GRU), which not only gather intelligence but employ “active measures” to obtain results which enhance Russian national interests. Spreading disinformation, assassinations, and blackmail are only a few of the “active measures” they have employed in the past. They would have a clear motivation to obtain higher prices and they probably spent some time thinking on how to bring this about through covert means.

There is no reason to suppose that, if the Russians saw a way to raise oil prices, that they would shrink from doing it, regardless of ethical or moral reservations. We need to imagine how such a result would be accomplished, as no obvious evidence is at hand to explain it. This is not a conspiracy theory, but a conspiracy hypothesis in search of evidence. If further information comes to hand, we will surely lay it out for our dear readers.

(photo by omni matryx courtesy of

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