Why Putin may help Trump again

Russia’s war in Ukraine has entered a standoff phase, with neither side able to make a decisive military move and neither willing to start negotiating a settlement, either.

So what might change the outlook?

One thing is the 2024 US presidential election. Analysts think Russian President Vladimir Putin is biding for time, hoping former President Donald Trump, the leading Republican contender, gets another term in the White House. Trump has suggested he would reduce or end US military aid to Ukraine, whereas President Biden has said his administration will stand with Ukraine “for as long as it takes.”

“Obviously, Putin is waiting for the outcome of the U.S. 2024 presidential election,” Michael McFaul, who served as US ambassador to Russia under President Obama, wrote on Substack recently. “If Mr. Trump is reelected, Putin has reason to believe that he could strike a much better deal on Ukraine. So why would he enter negotiations now?”

Putin, in fact, has much more reason to pull for a Trump victory now than in 2016, when he directed Russian agents to use fake social media accounts and other tools to damage Hillary Clinton’s campaign and aid Trump’s. Back then, Putin favored Trump over Clinton because he thought Trump’s threatened trade wars and other unorthodox policies might rupture American relations with some of its allies, boosting Russia’s interests.

Putin got what he was after.

As president, Trump slapped new tariffs on Canadian and European imports and became a loud in-house critic of the NATO military alliance, blasting many European nations for underspending on defense. At a summit meeting in Finland in 2018, Trump was practically subservient to Putin. Then came Trump’s effort to overturn his 2020 election loss to Biden, followed by the Trump-inspired riots at the US Capitol on Jan. 6, 2021. In some ways, Russia’s superpower foe never looked weaker.

But the stakes are far higher for Putin now, given that his disastrous invasion of Ukraine last year has led to the decimation of Russia’s army and international sanctions that are throttling the Russian economy. The United States, under Biden, has been the indispensable leader of the global effort to aid Ukraine militarily and economically. Ukraine wouldn’t necessarily collapse without American support, but it would probably have no hope of driving Russian forces out or even maintaining existing territorial lines.

Gas prices

Since Putin tried to influence the US election outcome in 2016, what might he do in 2024 to help Trump or another Republican win the White House? The answer may involve one of Biden’s biggest political vulnerabilities: gasoline prices. Biden’s approval rating tumbled as gas prices approached a new peak of $5 per gallon in June of 2022. Gas prices have since fallen back to around $3.80, but Biden’s approval rating has been stuck in the low 40% range nonetheless. To have comfortable odds of reelection, an incumbent president should have a minimum approval rating of 45% or so, and preferably 50%. Biden appears to be in the danger zone.

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Putin has tried to weaponize Russia’s oil and natural gas exports throughout the war, and he could do so to influence the 2024 US election. Russia is still the world’s second-largest oil exporter, after Saudi Arabia. Because of sanctions, Russia now sells less oil to Europe and more to China and India. But oil is a global commodity, and changes in supply or demand anywhere affect prices everywhere. So the question is whether Russia could pull enough oil from the market to push up US gasoline prices in a way that would harm Biden’s reelection odds.

It’s plausible. Russia desperately needs oil revenue to continue financing its costly war. Yet it has already cut oil production by about 300,000 barrels per day this year, in conjunction with a production cut by Saudi Arabia of roughly 1 million barrels per day. Those cuts have helped push global oil prices up by about $10 per barrel this summer. Some oil-producing nations can make more money with less production if demand is solid and prices rise, which is what has happened this year.

There are signs the Biden administration is aware of the risk.

Research firm ClearView Energy Partners pointed out in an Aug. 6 report that the Biden administration is quietly working with several oil-producing nations — including some unfriendly ones — to bring more crude on to the global market.

“Between now and the November 2024 Presidential election, we think President Joe Biden’s energy policy is likely to prioritize affordable gasoline prices,” ClearView analysts wrote. “Fuel cost sensitivities also appear to coincide with … outreach to Saudi Arabia … and a combination of rapprochement and realpolitik with three heavily sanctioned U.S. rivals—Iran, Venezuela and Russia.”

As a candidate in 2019, Biden called Saudi Arabia a “pariah” nation because of the apparent state-ordered murder and dismemberment the year before of Saudi journalist Jamal Khashoggi, who lived in the United States at the time and wrote for the Washington Post. But Biden is now working with Saudi Arabia to help normalize its relations with Israel and pursue other national goals. That could include an unstated agreement for the kingdom to produce more oil if prices get too high amid Biden’s reelection campaign.

“A Saudi-Israel deal with expanded US security guarantees could have the effect of making Riyadh more receptive to White House concerns regarding market tightness,” ClearView explained.

Last year, the Biden administration allowed more oil from Venezuela to flow to the United States, which is now happening. There’s also been a tacit thaw between the United States and Iran, with Iranian oil production hitting the highest levels in at least five years — and more production expected.

As for Russia, the Biden administration has so far refused to lower the price cap on Russian oil that the advanced nations known as the G7 imposed last December.

Under that voluntary agreement, the nations that provide most of the insurance and maritime services for the world’s oil tankers can’t work with anybody shipping Russian oil at prices above $60 per barrel. Yet the average price paid for Russian oil has risen above that and is now around $67, mainly because Russia is finding ways around the G7 collar and the price of Russian oil is rising along with the price of all other oil. Critics of the deal want the G7 to lower the price cap to $50 or less, but the Biden administration doesn’t want to risk a drop in the global supply of oil — even from Russia.

Additional American oil supply is also helping, with US drillers expected to produce a new record high of 13 million barrels per day by 2024, according to the Energy Information Administration. Unlike most OPEC nations, however, the US government doesn’t control domestic energy production. Private-sector firms do, and they’ll only produce more if they’re confident the added cost will generate a profitable return.

Biden does have one tool for lowering energy prices: oil releases from the nation’s strategic reserve. But Biden already released 180 million barrels in 2022, and the reserve is now at the lowest level since 1983. Biden might drain what’s left in the reserve if his political future depended on it, but he’d also draw criticism for tapping an emergency reserve for political purposes.

It’s safe to assume that Putin knows Biden’s electoral vulnerabilities, and Biden knows he knows. So while Biden prepares to take on Trump or another Republican, there may be an other brawl waged in the shadows.

Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman.

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