Russia has reportedly been offered a gas deal in exchange for its support for attacks on the Assad regime in Syria

Conflict tends to cultivate oil concerns, from the fuel rations of the World Wars to the spike in gas prices that seemingly accompany every dispute in the Middle East. Remember those lovely $1.25/gallon prices prior to the Iraq War? As the issues in Syria intensify and military action is all but guaranteed, oil prices are pushing past $112/barrel. But there is another aspect to the current situation that could stand to greatly affect the oil markets.

In transcripts apparently leaked and reported by The Telegraph, secret negotiations between Saudi Arabia and Russia have occurred looking to sway support for strikes on Syria in exchange for global control of the oil markets. How's that work, you ask? Here's a rundown.

Russia has backed the Assad regime in Syria since the Syrian uprising, and in grander terms, the Arab Spring began. This is for a couple of reasons -- Syria under Assad upgraded its military with Russian product, Russia maintains a Naval base there, they have numerous long-term oil contracts signed with Assad, and they fear further inciting the spread of radical Islam. For these reasons, Russia has been the Assad regime's strongest supporter and has vehemently opposed interference in the uprising, going so far as to label the Syrian rebels as Al Qaeda agents.

Now there are rumblings of military action circulating based on the rumors that the Iraqi Syrian establishment has attempted to buy yellow cake gassed its own citizens. In order to garner Russian support, or at least acquiescence, the head of Saudi Arabian intelligence reportedly met with Russian President Vladmir Putin offering assurances that Russian interests in Syria would not be harmed and an alliance with OPEC. This alliance would presumably further Putin's calls for a global gas cartel, which he presented in his Moscow Declaration.

The oil market is volatile enough without Middle Eastern conflict. Given conflict, and a new golbal oil cartel, and oil, gas, and derivative prices could all rise in the coming months.

Hold on to your hats.
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Nicholas Hamner

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