The war in Ukraine may be entering a critical new phase with the launch of a major offensive by Vladimir Putin’s armies. 

For weeks, reports from the ground have been spreading about an imminent Russian offensive, as Moscow shipped troops and materiel to Ukraine. And in the past few days, fighting has intensified, as Putin’s forces have launched a wave of attacks on the ground and in the air in the hope of breaking through Ukrainian lines.

What do we know about the offensive so far? What are Russia’s plans and goals? How strong are the countries’ respective militaries now? And what does this push from Russia mean as the war approaches its first anniversary?

To answer these questions and others, I spoke with Robert Hamilton, a research professor at the US Army War College’s Strategic Studies Institute. Hamilton is a retired colonel and 30-year veteran of the US Army, and he now analyzes conflict and security issues in the former Soviet Union and the Balkans. 

A transcript of our conversation follows, edited for length and clarity.

Michael Bluhm

Where do things stand on the ground in Ukraine now?

Robert Hamilton

We’ve been in a period of stalemate since early fall. There haven’t been dramatic territorial gains by either side. 

Offensive maneuvers get more difficult in the late fall when the rains come, and things repeatedly freeze and thaw. The ground and the roads get hard to maneuver on. 

The lines have moved hundreds of meters in one direction or another, mostly in the central Donbas region, which includes the provinces of Donetsk and Luhansk in eastern Ukraine. 

There’s been very little movement in the north on the Kharkiv front or in the south around Kherson since the big Ukrainian territorial gains last fall in the north and smaller but significant gains in the south. 

Michael Bluhm

Does either side have the upper hand?

Robert Hamilton

I don’t think either side has the upper hand. I’m not sure either side has the capacity to achieve a military victory in the near or medium term — months and maybe even a couple years. It’s unlikely that either side can achieve a conventional military victory and control all of Ukraine inside its internationally recognized borders. 

Achieving military victory requires the other side to agree that you have achieved a military victory and stop fighting. In this war, both sides have ways to continue fighting, even if they’re defeated conventionally. If the Russians were able to win conventionally, for instance, you would see an insurgency break out that the Russians would struggle to handle. If the Ukrainians were able to win, then the Russians could undertake airstrikes and ballistic-missile strikes. They have nuclear capability.

We’ve entered a period where things are not frozen, but neither side is likely to have the kind of victory that would put the end of the war within sight.

Michael Bluhm

What’s happening with the Russian offensive?

Robert Hamilton

The big Russian winter offensive that Ukrainians have been warning about has been underway for about two weeks. 

This is partially if not largely the Wagner Group doing this — the Russian mercenary organization that recruited extensively from Russian prisons last summer and fall. They’re using these former prisoners on the front lines in the central Donbas in human-wave attacks. They’re poorly trained, poorly armed, and poorly led — if they’re led at all — and they’re pushed forward to the Ukrainian lines. And the Ukrainians are mowing these guys down.

Wagner is using these human-wave attacks to find the stronger and weaker points in the Ukrainian lines. Then the Russian army — again, the Wagner group, mostly — is sending in better-trained, better-equipped, and better-led Wagner forces to exploit the weaker areas. 

It’s working — but very slowly and at an incredibly high cost. Russian casualty figures are around 5,000 a week. Those casualty figures can’t be sustainable over the long term. It seems like these human-wave attacks are the first stage of the big Russian winter offensive.

The Russians are gaining tens to hundreds of meters a day along the front line in the central part of the Donbas region, but I don’t see that it could lead to a major breakthrough, and I don’t see that it’s sustainable over the long term.

Michael Bluhm

Where exactly is the offensive taking place? 

Robert Hamilton

It looks like it’s confined to that central part of the Donbas. There was some talk very early in the winter that there would be another drive on Kyiv out of Belarus. I’ve seen nothing that points to that. It comes down to what the Russians are capable of.

The Russians are gaining territory along the lines around the city of Bakhmut, which has been in the news a lot because it has become a focal point for both sides. Strategically, it’s neither negligible nor significant. It allows access to larger cities farther west in the Donbas, such as Kramatorsk and Sloviansk, which are more important. 

Bakhmut has huge symbolic significance for both sides. The Russians have been unable to take it for several months, and both sides have pushed more and more forces into the area. Ukraine is determined to hold it, just to deny the Russians the PR victory of saying that they captured it.

Michael Bluhm

What comes next?

Robert Hamilton

I don’t know. The Russian Defense Ministry had a partial mobilization of 300,000 persons last summer. A lot of reports say the number of recruits was closer to 180,000 to 200,000. We don’t know how many of them have been sent to Ukraine. 

For the follow-up attacks, you need mobile forces: tanks, armored personnel carriers, and mobile artillery. But they lack leadership. So many capable Russian military leaders have been killed that there are not a lot of capable people with combat experience who can lead these units. 

I don’t know how Russia is going to follow up these gains with armored and mechanized maneuver forces. I don’t see the potential for the Russians to be able to do that on a large scale.

Michael Bluhm

Ever since Russia performed so poorly at the start of the war, there has been a lot of reporting about the weak state of the Russian military. How would you evaluate its condition now?

Robert Hamilton

That’s a great question. The Russian military has probably lost the capability to do a combined-arms, operational-maneuver offensive — that means armored and mechanized forces exploiting a breakthrough, supported by infantry, reconnaissance to the front and to the flanks, and long-range artillery fire to reduce enemy points of strength before the armored and mechanized forces hit. 

They weren’t able to do that in the beginning of the war, but the Russian military is learning through this war. It has learned how to do certain things, but I don’t think a combined-arms offensive maneuver is one of them. 

You have to have knowledge of how to fight, equipment, soldiers, leaders, and logistics. Logistics is a massive shortcoming of the Russians. It has been since the start of the war. They’re very tied to railroads. They’re heavily dependent on artillery, which requires a massive amount of cargo-carrying capacity because artillery shells take up a lot of room. 

All this means that they don’t have the capacity to logistically support a big offensive breakthrough, even if they had the capability in knowledge, equipment, and leadership. They couldn’t logistically support a drive deep into Ukraine. It’s impossible. 

Michael Bluhm

At the beginning of the war, the West implemented stringent economic sanctions on Russia. Russia has still been able to sell oil and natural gas, though at lower volumes than before the war. How are the problems in Russia’s economy affecting its ability to fight the war? 

Robert Hamilton

The Russian economy has proven to be a little more sanctions-proof and resilient than a lot of people expected.

The sanctions impacted the military most on the very high-end semiconductor chips required for precision weapons. Before the sanctions, Russia had been able to get these chips. But those sanctions appear to be airtight. No one but Taiwan, the Netherlands, and the US can make those chips. 

As the Russians draw down their stocks of precision long-range missiles, they’re not able to replenish them. They could use lower-end semiconductors, but then the weapon is not as precise. For months, the Russians have been using S300 surface-to-air missiles in surface-to-surface mode, which means they’re using missiles meant to knock down airplanes to attack ground targets because they’re running out of precision surface-to-surface ballistic missiles.

Michael Bluhm

What are Putin’s goals for the offensive?

Robert Hamilton

For his domestic population, I think Putin would consider victory to be Russian control of all four provinces that he annexed last summer. I don’t know if that ends the war for him. Given how poorly the Russian military has performed to this point, I think that would count as something Putin could go back to the Russian people with and call a victory. 

Many reports say that Putin has ordered Defense Minister Sergei Shoigu and Chief of the General Staff Valery Gerasimov to capture all of Donetsk and Luhansk provinces by the spring. What they’re doing on the ground implies that they have some objective of moving the lines to the administrative borders of those two regions. Then they can declare a success in the war, if not victory. 

Michael Bluhm

Are there other outcomes that Putin could sell as a win? 

Robert Hamilton

Capturing Kramatorsk and Sloviansk, in central Donbas. In 2014, those two cities were briefly under Russian separatist control. The Ukrainian military then came in and liberated them. Those two cities are important — they have a lot more military-strategic importance than Bakhmut. They’re bigger, and they’re more important symbolically. 

Michael Bluhm

What is the condition of the Ukrainian military? 

Robert Hamilton

One of the most interesting things about this war is we have a better understanding of the state of the Russian military now than we do of the state of the Ukrainian military. The Ukrainians have been very tight-lipped with their operational security. They tell us only what we need to know to help them. We don’t have a good understanding of their casualty rates.

The leadership style of Ukrainian armed forces surprised a lot of people. It was able to fight in a decentralized, less hierarchical model, where initiative is rewarded and small-unit leaders understand their commander’s intent and make decisions without asking for permission to take every step. 

The Ukrainian military is battered, but its morale is unbroken, and its leadership is still mostly alive and very effective. They captured much Russian equipment early in the war; they don’t have a problem with the amount of equipment. Western equipment, then, has been important to Ukraine not in terms of numbers but in raising their capabilities. 

Ukraine is in a better position with equipment than Russia — and will be in a better position as Western equipment continues to arrive.

Michael Bluhm

What are Ukraine’s goals in the short term?

Robert Hamilton

There’s no appetite for a diplomatic settlement. They believe that the deal they’ll get through fighting is better than the deal they’ll get through negotiation. 

Ukrainians think — correctly, in my view — that they’re having success on the battlefield, and more Western aid and equipment is coming. What’s the point of giving Putin a diplomatic victory now when you’re more likely to have greater success later through military means? 

Michael Bluhm

There has been some public debate about Ukraine’s strategy for responding to Russia’s offensive. Some say Ukraine should be patient, try to let Russia wear itself out attacking, and then counter-attack. Others say Ukraine should push back the Russians now as strongly as they can. What do you think they will do, and what do you think they should do?

Robert Hamilton

The former option is likelier and wiser. The Russians are expending a lot of manpower and resources on attacks that are gaining tens to hundreds of meters of front-line territory a day. 

Russia is expending a lot of energy and resources — and losing a lot of capability in this grinding, attritional offensive underway now. I think they should let Russia continue to expend energy, capability, and resources in ways that don’t do the Ukrainian military a whole lot of damage in operational or strategic capability. 

The Ukrainians may end up having to abandon Bakhmut. They’ll fall back to their defensive line around Kramatorsk and Sloviansk. They’re well dug in there. Their military headquarters were there before the war. They’ve been fighting there since 2014; they know the area very well. 

It’s going to be months before the capabilities that the West is offering are integrated into the Ukrainian forces. Their moment of peak capability will come in the mid to late summer, which is a good time for an offensive. The Russians may expend so many resources that they’ll be incapable of further decisive offensive operations right when the Ukrainians reach the peak of their capability.

Michael Bluhm

What do you see as the most likely outcomes of the Russian offensive?

Robert Hamilton

The most likely scenario is the Russian offensive will continue in a similar fashion to these last two weeks. It may gain more ground, but I don’t see a massive breakthrough where Ukrainian lines dissolve and the Russians drive deep into central Ukraine. I don’t think they have the capacity to do it. 

The attritional offensive will stall out, and then you’re likely to see a Ukrainian counter-offensive in the summer or early fall that won’t have the capability to end the war. Unless the Russian army dissolves and leaves the battlefield, I don’t think the Ukrainians have the capability to end the war by regaining all Ukrainian territory inside its internationally recognized borders.

Michael Bluhm is a senior editor at the Signal. He was previously the managing editor at the Open Markets Institute and a writer and editor for the Daily Star in Beirut.

When Russia invaded Ukraine last February, Vladimir Putin said the world was facing a confrontation between the civilizations of the West and Moscow. This division into two camps evoked memories of the Cold War, and, as in those days, Russian leaders again openly discussed using nuclear weapons. 

There’s a major difference between today and half a century ago — Moscow looks far weaker than the former empire of Stalin and Brezhnev. Putin’s forces have failed to achieve nearly all their goals in Ukraine, and many of the USSR’s satellite states are now NATO members. Ukraine was once part of the Soviet Union, but its ties to the United States and the European Union have never been stronger.

Yet many recent trends also resemble the contours of the Cold War. Moscow and Beijing have become staunch allies — closer than even during the communist era. Chinese President Xi Jinping is pursuing his openly declared ambitions to oppose the global power of the United States. Since the invasion, meanwhile, the US and EU have made a series of moves to completely sever trade relations with Russia and to halt the development of China’s tech sector.

Is the world splitting again into two hostile blocs, just as during the Cold War? To find out, I spoke with Sergey Radchenko, a historian of the Cold War and the Wilson E. Schmidt Distinguished Professor at the Johns Hopkins University’s School of Advanced International Studies.

A transcript of our conversation follows, edited for length and clarity.

Michael Bluhm

Observers have long said that the world is dividing into democratic and authoritarian countries. President Joe Biden has approached global politics with this frame, and many of his actions have only heightened the division; he organized a democracy summit, and he’s talked about creating a league of democracies. Xi Jinping, meanwhile, has cast China as an alternative model, more efficient than the Western one. The hostility between the bloc of mostly democratic, mostly Western countries and the Beijing-Moscow camp seems at least superficially similar to the Cold War era of two rival blocs. 

How much does the global political dynamic today resemble the Cold War?

Sergey Radchenko

There are some similarities but also vast differences. The distinguishing feature of the Cold War was the two sides’ different conceptions of modernity and how to get there. There were different approaches to the notion of property and to the economy — central planning in the Soviet Union and China or a market-oriented economy in the West. The ideological distinction today is authoritarianism versus democracy. This is a very big difference. 

But at the level of everyday life, there are a lot of similarities among Russia, China, and the West: restaurants run by private individuals, the service sector, and people everywhere have iPhones — if they can get them now in Russia. 

Another interesting distinction is that the connections between Moscow and the West were not as strong during the Cold War as they are today. Even though the West has tried to expel Russia from the world economy, it is still intricately connected. Natural resources still flow out of Russia, and Russia depends on imported goods. Moscow still trades with the world — it is not an autarkic system. 

Those connections are even stronger with China. If you compare China today to China during the Cold War, it’s night and day. Superficially, there are similarities between these two periods, but if you dig deeper, you see great differences.

Michael Bluhm

You mention that the Cold War was also a conflict of political and economic ideologies. How would you compare the ideological dimension of global politics today to the Cold War?

Sergey Radchenko

If you look at Russian and Chinese ideology today, you’d have to ask, What exactly is it?

If there is a Russian ideology, it’s ethnic nationalism. China’s case is also largely nationalism. In China, nationalism began to displace communism as an ideology in the 1970s, after the Cultural Revolution. It comes from the disappointment of the population with ideological dogma and with the great promise of a communist revolution that never happened. The Chinese Communist Party was facing a legitimacy deficit, and they were looking for things to fill it — so nationalism replaced communist revolution. The same thing happened with the Soviet Union falling apart; the Russian Federation had to reinvent itself on the basis of Russian nationalism. 

Nationalist ideology exists in many other places. Nationalism is not at all a new ideology, but it’s not the same as during the Cold War.

Michael Bluhm

But can nationalism function as a unifying ideology for a bloc of allied countries? Iran’s theocracy, for example, also has a prominent nationalist element. But do these parochial nationalisms create limits for any alliance? 

Sergey Radchenko

They do. And even when China and the Soviet Union had a common ideology in the 1960s, they were the worst of enemies. In 1969 they fought a border war, and the Soviets threatened to use nuclear weapons. A shared ideology is by no means a guarantee that you will not have a really nasty relationship.

Just before Russia invaded Ukraine, Putin went to Beijing, and the countries issued a joint declaration that had an ideological underpinning for the first time in recent memory. It talked about opposing an American conception of world order. I’m not sure where this ideological dimension is going. 

You mentioned Iran earlier. Iran is becoming closer to Russia and supplying weapons to Russia for the war against Ukraine. Russia, China, and Iran have joint military exercises. I would call it an alignment and not an alliance. What is the basis for this alignment? They share an anti-American agenda. But beyond that, their interests don’t converge all that much.

Michael Bluhm

Let’s stick with China for a moment. China today is very different from the China of the Cold War. It’s far more powerful militarily, economically, and politically. As Xi Jinping has consolidated power in China, relations between Beijing and the West have worsened. Even EU leaders such as Margrethe Vestager speak openly now of an adversarial relationship. 

Is China today playing the role that the Soviet Union did in the Cold War?

Sergey Radchenko

China is the leader of this new alignment, but I don’t know that China has the ambition to be the new Soviet Union. The Soviet Union had the ambition to transform the world. Is China interested in preserving the international order and just improving its place in it? Or are they trying to replace the international order? Do the Chinese have a grand strategy?

We don’t have a clear view of what the Chinese are thinking, nor do I think the Chinese know what they want. They have proposed a series of stratagems such as the Belt and Road Initiative. They talk about “win-win” and a “Chinese dream.” These things are vague, and it’s not clear what they entail — and whether they entail undoing the existing structures of the international order. 

From the Chinese perspective, the world is looking more chaotic, and the Chinese are trying to take advantage of this chaos. But it’s not clear that they have the same sort of single-minded pursuit of global transformation like the Soviet Union did through Marxist-Leninist ideology.

Michael Bluhm

For many, the Cold War comparisons were revived when Russia invaded Ukraine in February 2022. But Russia seems to have made a terrible mistake. It appears much weaker than a year ago — and weaker than the Soviet Union. Where does Russia stand today? 

Sergey Radchenko

Putin obviously miscalculated. He was looking forward to a more chaotic world where he felt Western influence was declining, and he perhaps thought that he could improve Russia’s relative position by invading Ukraine. It was a very poorly thought-through idea. 

This is where the Cold War connects to today: Russia has always felt that it does not get enough respect in global politics. That feeling is rooted in the Soviet past. This was a key preoccupation of Soviet leaders from Stalin to Khrushchev, Brezhnev, Gorbachev, and even to Yeltsin after the fall of communism. They felt that the Soviet Union or Russia should exercise a prominent, central role in global politics, and that the United States was not willing to give it that place in the system. That’s a major continuity. 

Michael Bluhm

After the invasion of Ukraine, the West experienced newfound unity and moral clarity, with overwhelming condemnation of Putin and support for Kyiv. But then inflation rose to highs not seen in decades, and steeply rising energy costs have caused protests in many European countries. How does Western unity look today?

Sergey Radchenko

The jury is still out. Western unity has been much greater than one might have supposed back in February 2022, but Putin is playing the long game. He thinks he can outlast the West. He thinks this unity will not last once something goes wrong — an economic downturn or recession, the rise of populism in Europe, or a new president in the United States. This ability to wait and to plan for the long term underpins Russian policy at the moment. 

Putin also thinks that he can create disagreements among European countries. This is a Cold War parallel; it’s a time-tested Soviet and Russian approach to international politics, in particular to Europe. During the Cold War, the Soviets’ key priorities were to push the United States out of Europe and undermine European integration. 

But Russia, just as the Soviet Union did, has consistently underestimated its ability to bring Europeans and Americans together. If Russia or the Soviet Union did not do stupid stuff like invade neighboring countries, there would be a lot less unity among European countries. Stalin threatened Berlin in 1948-49, so NATO was created in 1949 as a response. Stalin threatened Turkey, so Turkey joined NATO. In 1979 and throughout the 1980s, there was the Soviet invasion of Afghanistan. The Russians try to play on the contradictions with the West, but they also pursue stupid policies that bring the West together against them. 

Michael Bluhm

But many powerful countries in Asia and the Middle East do not fall into either of these blocs. India, for example, has skirmished with China along their shared border, but Delhi has maintained robust trade ties with Russia. Saudi Arabia warmly welcomed Xi recently, in a visit that irritated many in Washington who saw Saudi Arabia as a longstanding US ally. 

How do you see other countries approaching the new global dynamic?

Sergey Radchenko

I don’t think they like this at all. They like a much more multipolar world, where they can maintain their freedom of action. India never liked the idea of a divided world. That is why they pursued the policy of non-alignment since Jawaharlal Nehru became prime minister in the 1940s. It’s a time-tested tradition. 

Today, the relationship among China, Russia, and India has the kind of flexibility lacking during the Cold War. During the Sino-Soviet alliance in the Cold War, if India and China had a conflict and the Soviets tried to stay neutral, the Chinese said, You’re betraying your obligations as an ally. Today, when the Chinese and the Indians have a conflict in the Himalayas, the Russians can just say, We’re sorry, but that’s your business. And China and India will accept that. The Global South would much prefer not to have a world divided strictly into a system of two blocs and alliances.

Michael Bluhm

So is the world today more like the bipolar Cold War, when it was split into two camps, or is it multipolar — meaning many competing centers of power?

Sergey Radchenko

A lot of people say that today’s world is different from the Cold War precisely in that respect. There’s something to it, although this bipolarity was falling apart since the 1970s. China disconnected from the Soviet Union and then exited the Cold War — and was even aligned with the United States against the Soviet Union. 

Today, there is a tendency toward the solidification of two blocs, as we saw with Biden’s effort to create a bloc of democracies. But I don’t think it’s going to fly, because of the economic underpinnings of the world system, the redistribution of wealth to new countries, and the emergence of new centers of power. Those are real things. 

Michael Bluhm

What does a more multipolar world mean?

Sergey Radchenko

It’s a very interesting question, because the world may become much more chaotic as new centers of power try to redefine the world in a way that suits their interests. That is what Putin was trying to do by invading Ukraine. He was thinking he could capitalize on this by acting in a rough and unexpected manner. He miscalculated with regard to Ukraine, but I don’t think he miscalculated in his interpretation of where the world is going. 

We are moving more in the direction of diffuse centers of power, with many states unwilling to be drawn into either of these new blocs. I’m not even sure that China and Russia will emerge as a bloc. They will maintain their distance and their own internal contradictions, though they will probably not allow those contradictions to spill into a conflict as during the Cold War.

Ignoring months of lobbying by the White House, Saudi Arabia and other US allies in OPEC+ moved last week to slash the amount of oil on global markets. The countries of OPEC+ — a cartel of oil-producing nations — announced on October 5 that they would be decreasing the cartel’s production quota by 2 million barrels per day. The decision will likely drive up energy prices, causing more pain for an already slowing global economy. 

US officials expressed acute frustration with the cuts. President Joe Biden this week said there would be “consequences” for Saudi Arabia. The decrease looks like a “smack in the face” to the president, one energy analyst said, after Biden traveled to Riyadh in July and memorably fist-bumped Saudi Crown Prince Mohammed bin Salman — a controversial gesture amid reports that MBS had ordered the 2018 killing of Saudi-American journalist Jamal Khashoggi.

Sen. Chris Murphy (D-CN) accused Washington’s Arab allies of choosing Moscow and Beijing over the United States. Sen. Robert Menendez (D-NJ), chair of the Senate Foreign Relations Committee, called for freezing all U.S.-Saudi cooperation, including a halt to arms sales and security cooperation. Rep. Tom Malinowski (D-NJ) said he would introduce a bill — previously proposed by Republicans — to remove US troops and defense systems from Saudi Arabia. 

But such responses seem to miss a crucial point about OPEC+’s motivations. That’s what Samantha Gross, director of the Energy Security and Climate Initiative at the Brookings Institution, a Washington-based think tank, told me in a recent conversation.  

Gross’s take is straightforward: Arab states are simply pursuing their self-interest in keeping oil prices high. She cautioned against seeing the OPEC+ decision as a choice by the group between the US and Russia. Today is not like the Cold War, when many Middle Eastern states balanced between Washington and Moscow, seeking to extract maximum benefits from both superpowers and hedging in case either bloc won.

Besides, although the cut might boost oil prices, Gross says the prospects for Russia’s future oil revenues are potentially quite dim, as the G7 and the European Union prepare to implement new measures that could substantially reduce Putin’s proceeds from oil. Moreover, the actual production cut is likely to be around 1 million barrels per day — not 2 million — because many OPEC+ members weren’t meeting their quotas anyway, according to Gross.

I spoke with Gross last week in the wake of OPEC+’s announcement. A transcript of our conversation follows, edited for length and clarity.

Michael Bluhm

Many in the United States see the OPEC+ decision as a slap to Joe Biden. Biden traveled to Saudi Arabia a few months ago and gave a fist-bump to Mohammed bin Salman (MBS), whom his own intelligence services say ordered the assassination of journalist Jamal Khashoggi. 

But instead of shoring up relations, Saudi Arabia now makes a move that will almost certainly cause oil prices to rise — which will cause gas prices to go up, harming the US economy and perhaps the global economy. 

Why would longtime US allies such as Saudi Arabia and the United Arab Emirates choose to do what Moscow is asking them to do instead of what Washington wants them to do? 

Samantha Gross 

There are several reasons. But we need to start by not framing this as the Saudis and, to a lesser extent, the Emiratis choosing between the Russians and the Americans. 

Middle Eastern states have their own interests, and they were genuinely concerned about rapidly falling oil prices and over-producing as the world was going into a recession. They did what they do in those situations: pulling back production. They have their own interests and economies to look after. And they have agency. It’s not just choosing between the United States and Russia. 

Both Saudi Arabia and the UAE are US allies, and we cooperate on many things. But the US relationship with Saudi Arabia, especially with MBS, is not as cozy as it was during the last administration. I am okay with that — I see a lot of things in this Saudi regime that I find alarming. Despite the fist bump that you mentioned, President Biden and Mohammed bin Salman are not as close as President Trump and Mohammed bin Salman were. Our influence there is lower. But the production decrease was primarily about these countries doing what they thought was in their own best interests.

I don’t think this is going to be a killer for the global economy, the US economy, or President Biden. The market doesn’t like the news, but oil prices haven’t skyrocketed. If Russian oil supply ends up declining quite a bit, these Arab countries may change their minds about decreasing production. But for now, they’ve done what they think is in their best interests — and that is a sensible reaction to market conditions. I don’t think it’s necessarily meant to be a huge finger in the eye to President Biden, although it might look that way.

Michael Bluhm 

Where and how much are these OPEC+ production cuts going to affect the prices of gasoline and energy?

Samantha Gross 

Oil is traded on a global market. The price isn’t the same everywhere — prices differ because of transportation and type and quality of oil. But we’re going to see the effect in prices of fuels everywhere.

I’m not sure how much of an effect it will have. Oil markets are tremendously uncertain right now. We might be entering a recession. That’s a great source of uncertainty. 

Future Russian production is also very uncertain, as are the effects that sanctions will have. 

A third wild card is that OPEC+ announced that they were cutting production quotas by 2 million barrels per day. But production is not going to fall by 2 million barrels a day because many OPEC producers weren’t meeting their quotas. 

You’re not going to see a reduction of 2 million barrels a day — you might see half that. Two million barrels sounds like a big number, and they wanted the market to see a big number. But production isn’t going to fall that much. 

It’s really difficult to look at past decreases in production and figure out what people might see at the pump. Conditions are different every time, and the conditions this time are particularly different and particularly uncertain.

Michael Bluhm

OPEC+ clearly wants oil prices to rise. But higher oil prices would mean more oil revenue for Vladimir Putin, which would help fund the war in Ukraine. What could this cut in production quotas mean for Russia and Ukraine?

Samantha Gross 

I’m sure that the Russians were in OPEC+ arguing for a decline in production, but Putin’s future oil revenues depend on a lot of other things. The bigger questions for Russian production are upcoming European sanctions and the American proposal to put a global cap on the price of Russian oil. 

That’s the big deal, and the bigger of the two for Russia is the price cap — what the cap is and how well it works. For the time being, Russia is certainly happier to see higher oil prices. Their oil is selling at a discount now because people don’t want to buy it.

After European sanctions go into effect in December, it will become more difficult to buy Russian oil. Those sanctions forbid EU and UK companies from shipping, financing, or insuring Russian oil. That would put a real dent in Russian oil’s ability to reach the market. 

Michael Bluhm

Enforcing a global price cap is daunting, but even the countries that don’t participate could have more leverage to demand below-market prices from Russia. 

Samantha Gross 

And if that happens, that is considered a success for the policy. People at the Treasury Department understand that that’s going to happen, regardless of whether countries formally participate in the policy. They’re like, “Lowers Russian revenues? Works for us.” Those are intended consequences.

Michael Bluhm

You say that the production decrease might not do much damage to the global economy. Why do you say that? Are there other potential sources of oil to make up the shortfall from OPEC+?

Samantha Gross 

There’s not an obvious source of new production to fill in the cuts. The question is where demand is. No new oil is immediately going to replace those cuts. If oil prices are high and stay high, then you’ll see additional production — particularly from the United States, where we can increase production quickly. 

But the open question is much more about demand. Where will demand go in light of the global economy, supply chain issues, the potential slowdowns in Europe due to Russia’s cut-off of natural gas, and a slowdown in China? 

Michael Bluhm

Biden has said that his trip to Saudi Arabia in July was not primarily about oil. Even though he talked about oil, the trip was intended to promote US goals in the region, especially the normalization of Israel among Arab countries.  

Samantha Gross 

He was asking for a production increase from the Saudis, but he was never going to get that because the Saudis didn’t have more oil to give. 

Michael Bluhm

Energy analysts have made a couple arguments about the effects of Russia’s invasion of Ukraine. 

One is that the invasion will drive up oil and gas production in the United States as companies try to replace the Russian imports that European countries want to stop buying. Another argument is that the war will accelerate the drive to develop renewable energy as governments move to decrease their reliance on dangerous petro-states such as Russia and Saudi Arabia. 

Samantha Gross 

I don’t think those two options are mutually exclusive. The world has already been focusing on the energy transition away from fossil fuels. 

Russia is shooting itself in the foot with its current behavior because Russia, as the world’s largest energy exporter, was going to have problems anyway. By invading Ukraine, they’ve taken that challenge and moved it forward in time. And they’ve made it steeper because now the world is trying to specifically cut out Russian fossil fuels, particularly in Europe. And Russia isn’t well-suited to sell oil to the markets that still want its oil because of shipping and location. 

US oil and gas production are expanding now in response to the market, but I don’t think that’s necessarily anathema to an energy transition here or anywhere else. We have to feed the energy system that we have today. While we make the transition away from fossil fuels — or while we are working on getting away from Russian fossil fuels — we’re going to need something to fill in. 

Both things can be true: increased US fossil-fuel production and a faster transition away from fossil fuels. It may be environmentally advantageous to transition by temporarily increasing US production because we have stricter environmental standards than the Russians do. We release much less methane from our natural-gas production, for instance. A switch from Russian fossil fuels to American fossil fuels, as we transition, could be a net positive for the climate, as long as we don’t lose track of making the transition. 

That’s a nuanced answer, but you have folks who say, “We shouldn’t be producing any fossil fuel here.” As long as we’re using fossil fuel, we should produce it here because we can do better. Russian fossil fuel is a mess, so it’s not bad to replace it.

Michael Bluhm

How might the cut in production quotas affect relations between the Biden administration and Saudi Arabia and the UAE?

Samantha Gross 

I don’t think this production cut is necessarily a positive for our relations, but our relations encompass a lot more than oil. The US and Saudi Arabia are strategic partners in the region for other issues, particularly terrorism and Israel. Our relationship is not entirely based on them being our gas station. 

President Biden said that his recent visit to Saudi Arabia was in large part about Israel, and we have been working with them a lot to cooperate more closely with Israel on mutual interests. That’s an important part of our relationship. 

They’re very imperfect partners. We don’t always agree. Very seldom do we have an ally with whom we agree with on everything. But we find where our interests align, and we work together. This is an area where our interests are diverging, but I don’t think it ends the relationship. We continue to cooperate on the things we agree on.

Michael Bluhm

How much leverage does the US have in talks about oil with Saudi Arabia?

Samantha Gross 

We have more leverage than we used to because we produce a lot more oil. It used to be somewhat true that we relied on them. The world market relies on them for oil, but the fact that the United States is the world’s largest oil producer — and an oil exporter — now makes us a different kind of player. It changes the relationship; it makes the US more powerful, not less. 

But then you have folks in Congress saying, “Why are we even talking to them when we’re the world’s largest oil producer? Biden, if you ‘drill, baby, drill,’ you wouldn’t have to talk to them.” No, that would never be true. Oil is a global market. But we occupy a very different place in that global market than we used to. 

And instead of these higher oil prices all going into our foreign expenditures, we’re keeping some of them now. The dollars recycle in our economy, not theirs. High gasoline prices are incredibly unpopular politically, but they’re a lot easier for the US economy than they used to be because we get to keep some of the money.

Michael Bluhm is a senior editor at The Signal. He was previously the managing editor at the Open Markets Institute and a writer and editor for The Daily Star in Beirut.