How Much Is Russian Incursion About Oil?

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March 28 (Bloomberg) -- Barclays Head of North American Commodities Helima Croft and Bloomberg's Indira Lakshmanan discuss the crisis in Ukraine on Bloomberg Television's "In The Loop." (Source: Bloomberg)

Than we do, on ukraine.

What is next, and are we doing enough to contain vladimir putin?

I am joined by berkeley's head of north american commodities.

I will start with you.

As you listen to president obama in that interview on cbs news, did you feel as though he is "step up the rhetoric?

I actually think the choice of the word in circling, we are not trying to encircle russia rush is key.

The perception on the u.s. side that about who -- vladimir putin feels pretty 12 former soviet bloc countries are now members of nato and they are literally right along the edge of the russian border, including poland, lithuania, and the former baltic states.

I think what the president is trying to do is signal that we -- it is not about circling you are not about an east-west cold war standoff but we are trying to protect democratic ukraine and the desires of those people.

More of an appeasement strategy?

More, don't worry -- no, i think he's trying to say while russia sees this as an existential crisis it is not how be you or the u.s. sees it.

He is trying to give reasons why the u.s. does not have an interest in ukraine goes beyond that.

It is not a geopolitical thing.

But in terms of stepping up the pressure, let's not forget that just yesterday we had an interesting report from some of my colleagues in the washington bureau about new limits on defense export control.

Dual use materials that the u.s. will no longer be best allowed to be sold to russia.

It affects not only the defense industry in russia but also energy.

That is a key way they are cranking up the pressure.

Congress approved a whopping $150 million ai plan inde to ukraine -- in aid to ukraine.

The concern is it is just a drop in the bucket and they need a whole lot more.

Is it just the symbolic at this point ? between limited sanctions and limitedaid, are we just trying to say, we are here?

What -- for example, no one is talking about restrictions on the russian central bank and no one is talking about banning russian energy exports.

It would be horrible for europe economically.

The sanctions are a big step up but not enough pain really to change.

If they are not enough to change his calculus, what should we be assuming his ultimate calculus is?

There is a lot of talk about his eurasia dream, in economic block from russia to china, bringing in some of the former ussr countries.

Is that ultimately what you think he wants?

The latest intelligence reports witnessing indicates western intelligence believes there is even a chance putin will go into eastern ukraine, that he will not stop with crimea and we have to put on the table that there is a possibility.

In terms of what we are going to do to respond, i think the u.s. and eu will be calibrated to what two does.

-- what putin does.

An actual invasion is a completely different thing.

There are in place possibilities to step up sanctions as far as you are talking about.

No one is talking about iran level sanctions but the idea of cutting off the russian credit card networks and bank access to the financial system, they are incredibly painful and extreme things the u.s. and the eu could do that we know can ricochet back.

In some ways it feels like an old-fashioned territorial land grab.

We have not really seen warfare played out in this kind of way.

Going in and seizing a territory which, by the way -- let's face it, we know he likes the warm water port, but it has economic things of its own.

This is more of a political move than say an economic move?

A lot of russian experts said he would never do this.

They said coming off the sochi olympics, he will not send troops into crimea.

Some even said if you want to influence a broader ukrainian politics you need crimea and solid voting bloc for russia going into election.

I think the worry is he confounded conventional wisdom as to what he would do that -- do there.

We don't know if he will go with the eastern ukraine because we will step of the sanctions, it could be economic armageddon.

But we don't know if he is going to take the step and that is the most economically important region of eastern ukraine.

You know what is amazing, the people of russia really are very supportive of him.

His approval rating, upwards of 80%. 63% of russians right now feel the coverage as far as the media goes is spot on, it is accurate, it is up ejected.

Reporters without borders would is a great.

In fact, russia is really down at the bottom of the barrel when it comes to freedom of the press.

But clearly, he's got the people's support.

You hit on an interesting point, which is the russian state media led by rt, which you can see in this country, but many other outlets, are presenting a picture of ukraine as falling apart, fascists running the government, the russian speaking minority being under threat.

They are creating a certain picture which really has whipped up the support for putin.

It is not at all the picture the acting ukrainian government agrees with or the u.s. or the eu agrees with, but it is creating an image credit to your earlier question as to why putin is doing this, if you look at a map of crimea it is not hard to see how -- he was worried with a new western government might find an agreement that might eventually join me eu and might join nato, he doesn't want the little piece of crimea right on the edge of russia under nato.

That's not forget the energy equation.

One of the reasons bob who -- vladimir putin has support of the people in russia is that energy prices have been high and that has benefited the economy extraordinarily.

In other words, he has enabled to draw a lot of strengths on the energy boom for russia.

And ukraine is important to that.

The natural gas pipelines that go through the rest of europe.

It makes it, doesn't not, therefore more important to europe and more and pour into us in that this is a conduit for getting energy to europe?

I think it also in the stores even if we talk up -- underscores, even if we talk about stepping up sanctions it will be hard for europe to do it economically because they get their gas from russia.

30% of the supplies.

Some pipelines are built around ukraine but it still goes through the pipelines.

All this talk about increasing lng exports from the u.s. is not really a possibility.

It is not an overnight -- a lot of people say one of the best things going here in u.s. is we have an energy renaissance, which means he could not only be helpful from an economic standpoint but national security because theoretically you could export this and really start to drive energy prices down.

I was going to say, helene is right that the infrastructure is not there yet.

We don't have the infrastructure to do it.

But it is fascinating that georges soros said loosen up some of the petroleum reserves, export some of and push prices down.

The president will be traveling to saudi arabia.

What do you think the message on the energy front is going to be?

I think of the energy front it will be to maintain stable prices him a stable supplier.

This is what we always say to saudi arabia.

Your role as the central banker of oil is to keep prices stable, keep pumping -- keep pumping and make up for supply shocks.

But they look at what the u.s. did with red lines over syria and they said with a lack of u.s. resolve to protect their interest.

They are afraid we will cut a deal -- they will cut a deal with the iranians.

The north american energy revolution may fear a facilitation of u.s. withdrawal.

Why are we there if we don't get our oil from the gulf?

They are intimidated by this, fearful of this.

The ability of the united states to produce so much oil, even though we are still working on the infrastructure.

They are concerned that we have huge u.s. bases in the region.

Why spend so much on the air base in qatar to protect sea legs for crude oil increasingly going to asia?

I think they fear it facilitates the u.s. pivoting toward asia and essentially retreating from the region.

What would that mean for saudi arabia if we were to not be there to back them up, to give them that support so that they could maintain price stability?

What does it mean for them?

I don't think it will happen in the short term.

Of course, it may be based on the oil but there is so much that goes beyond that.

Remember, we were looking to the saudi's as the head of this peace plan, this arab peace initiative that would bring peace to israel and the palestinians.

We need the saudi's on so many levels.

Let's not forget, that sally's were ready to punish the russians.

If they can, they will be ready to because of the policy on syria.

Depressing oil prices would hurt to russia but it would also hurt the saudis and a lot of people.

One thing i would say, post-arab spring, what you have to keep in mind is saudi spending commitments have risen enormously.

Of the way they kept the population from going into the streets was to double down on the bargain that we will take care of you from cradle to grave.

Don't ask for democratic change.

So they really stepped up their domestic standing.

They stepped up financial support.

Interest i do versioning in certain countries.

They are actively supporting the syrian opposition.

Groups we are not comfortable with.

But these are expensive new spending commitments.

It is not easy for saudi arabia to lower the price to punish countries like russia because of where they are and their own spending levels.

What do you think transpires in russia over the next three to six months?

How do you think the u.s. would deal with it if in fact vladimir putin decides to take on more territory in ukraine?

We need to watch what happens the next three to six days or weeks.

We don't know from day to day.

I think it is fascinating that the former u.s. head of nato was just talking yesterday about how maybe we made some mistakes in trying to pull back our forces to take out -- to do this pivot to asia, and we need to reevaluate all of that.

We have president obama in europe underscoring the u.s. commitment to nato but also calling on the nato partners to do their part and to up their spending, which is something that a lot of nato partners, including the u.k., have not been keen to increase their military support the region.

In the case of a crisis like this, we had all thought europe was so stable.

Looming debt crisis to talk of another cold war come a which brings me to -- last word to you.

Is this may be a minor version of history repeating itself in terms of cold war tendencies?

I think what is interesting is it is really the reassertion of russian nationalism.

I think it is something where, again, we have been so focused

This text has been automatically generated. It may not be 100% accurate.

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