Global Oil Price Drop Gives Obama, U.S. Foreign Policy a Boost

Global Oil Price Drop Gives Obama, U.S. Foreign Policy a Boost
Oil pump jacks work in unison on a foggy morning, Williston, North Dakota, Dec. 19, 2014 (AP photo by Eric Gay).

In the waning days of 2014, U.S. President Barack Obama’s approach to foreign policy, roundly castigated by critics for most of the year as being weak, feckless and indecisive, appears to have been vindicated by more recent developments. Eschewing the calls for immediate reactions to a series of disparate events—from anti-government protests in Venezuela to Russia’s intervention in Ukraine—the president opted for diplomacy and sanctions, augmenting his existing approach to perennial problems like Iran and its nuclear program. Now, the story goes, a whole list of U.S. opponents, from Cuba to Iran, are moderating their defiance of Washington and looking for ways to negotiate settlements. Even Russia has now agreed to restart talks to settle the Ukraine crisis.

How much of this is due to U.S. policy, however, and how much can be attributed to the collapse of global energy prices? Former Russian Finance Minister Alexei Kudrin recently opined that between “25 and 35 percent” of the reason for the dramatic decline in the value of the ruble—a very public symptom of the ailing Russian economy—could be attributed to Western sanctions. In assessing Cuban President Raul Castro’s willingness to normalize relations with the U.S., former Mexican Foreign Minister Jorge G. Castaneda specifically cited “the recent collapse in the price of oil” and how this has negatively affected the “two countries . . . on which Cuba has historically depended to keep its economy afloat: Russia and Venezuela.”

U.S. sanctions, particularly financial measures that target a company’s or country’s ability to conduct transactions in U.S. dollars, certainly have had an impact, along with measures designed to cut off access to American technology. Yet it took the floor falling out from under global oil prices to deliver the one-two punch that is now creating real problems for Caracas, Tehran and Moscow. Earlier this summer, when energy prices were high, a national champion like Russia’s Rosneft could scoff at what were being described as ineffective Western measures by attempting to presell oil as a way to bypass limits on Western lines of credit. Now, the collapse both in the ruble’s value and in the price of oil raises questions about Rosneft’s ability to pay its debts.

Keep reading for free!

Get instant access to the rest of this article by submitting your email address below. You'll also get access to three articles of your choice each month and our free newsletter:

Or, Subscribe now to get full access.

Already a subscriber? Log in here .

What you’ll get with an All-Access subscription to World Politics Review:

A WPR subscription is like no other resource — it’s like having a personal curator and expert analyst of global affairs news. Subscribe now, and you’ll get:

  • Immediate and instant access to the full searchable library of tens of thousands of articles.
  • Daily articles with original analysis, written by leading topic experts, delivered to you every weekday.
  • Regular in-depth articles with deep dives into important issues and countries.
  • The Daily Review email, with our take on the day’s most important news, the latest WPR analysis, what’s on our radar, and more.
  • The Weekly Review email, with quick summaries of the week’s most important coverage, and what’s to come.
  • Completely ad-free reading.

And all of this is available to you when you subscribe today.

More World Politics Review