Perhaps only during a summer in which the price for a barrel of oil has traveled between a more than $30 span could a shooting war in the oil-rich Caspian region already be priced in by traders on the New York Mercantile Exchange. Western leaders engaged in intense diplomacy Friday to persuade Russia to pull troops out of Georgia, but regional tensions soared after a top Russian general warned that Poland could face attack over its missile defense deal with the United States.
Even if it were never far from anyone's mind, Moscow's influence over oil and natural gas reserves in the region came roaring to the forefront when it sent armored columns into neighboring Georgia, which controls key pipelines that deliver crude from Central Asia.
But so far, there is little evidence that the conflict has stemmed the slide in crude prices. On Friday, with Russian troops still in control of strategic cities like Gori, light, sweet crude for September delivery fell $1.24 to settle at $113.77 a barrel on the New York Mercantile Exchange after falling to $111.34, its lowest price since May 2 and more than $35 — or 24 percent — below its July 11 trading record above $147.
Part of the reason, analysts said, is that traders have already priced in a large amount of geopolitical risk into the market. In addition, prices already had plenty of downward momentum after weeks of declines, making it harder for market bulls to spark a rally.
Another factor is that the Baku-Tbilisi-Ceyhan pipeline, by far the largest of three crude oil pipelines that pass through Georgia, had been shut down before fighting broke out because of an apparently unrelated fire on a segment of the conduit in Turkey.
Yet Kurdish separatist rebels took responsibility for the sabotage.
And even before the events in Georgia, the Russian market had already suffered from the continuing struggle between Russian oligarchs and Britain's BP at their joint company, TNK-BP.
Russia exports more oil than any country except Saudi Arabia and is the world's leading producer of natural gas.
Peter Zeihan, vice president of analysis at Austin-based geopolitical research firm Stratfor, said the conflict highlighted how quickly Russia is able to gain control of the key pipelines in Georgia.
Source: Associated Press| By ADAM SCHRECK
Even if it were never far from anyone's mind, Moscow's influence over oil and natural gas reserves in the region came roaring to the forefront when it sent armored columns into neighboring Georgia, which controls key pipelines that deliver crude from Central Asia.
But so far, there is little evidence that the conflict has stemmed the slide in crude prices. On Friday, with Russian troops still in control of strategic cities like Gori, light, sweet crude for September delivery fell $1.24 to settle at $113.77 a barrel on the New York Mercantile Exchange after falling to $111.34, its lowest price since May 2 and more than $35 — or 24 percent — below its July 11 trading record above $147.
Part of the reason, analysts said, is that traders have already priced in a large amount of geopolitical risk into the market. In addition, prices already had plenty of downward momentum after weeks of declines, making it harder for market bulls to spark a rally.
Another factor is that the Baku-Tbilisi-Ceyhan pipeline, by far the largest of three crude oil pipelines that pass through Georgia, had been shut down before fighting broke out because of an apparently unrelated fire on a segment of the conduit in Turkey.
Yet Kurdish separatist rebels took responsibility for the sabotage.
And even before the events in Georgia, the Russian market had already suffered from the continuing struggle between Russian oligarchs and Britain's BP at their joint company, TNK-BP.
Russia exports more oil than any country except Saudi Arabia and is the world's leading producer of natural gas.
Peter Zeihan, vice president of analysis at Austin-based geopolitical research firm Stratfor, said the conflict highlighted how quickly Russia is able to gain control of the key pipelines in Georgia.
Source: Associated Press| By ADAM SCHRECK
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