Iran-Saudi Tensions and the Future of Oil, page-8

Just a follow-up to my initial posting re: Russian involvement in the Northern Gulf region.

As we now know, the Caspian Sea Flotilla of the Russian Navy launched 26 'Klub' class ship-launched cruise missiles yesterday targeting terrorist targets in Syria. Although this capability is not particularly special or unique to Western forces, it does represent an escalation in Russian support for their proxies in Syria. Russian air assets have been surprisingly successful earlier in the week (with somewhat more relaxed ROE than those inhibiting Western air power) and could have achieved their objectives by remaining with that strategy. There is minimal counter-air assets in the hands of non-Assad forces that would pose any threat to aircraft above hand-held SAM range. This raises an interesting point. Current Russian air assets in Syria as of Monday total 35 aircraft basing out of Latakia. This number includes 4 Sukhoi SU30SM Flanker C's and 6 Sukhoi SU34 Fullbacks (both Flanker derivatives and HIGHLY capable in air to air in addition to their mud-moving roll) as well as a mixture of SU24 Fencers and SU25 Frogfoots. The question arises as to why the need to bring Flanker series fighter-bombers to an arena where there is minimal oppositional air forces unless you want to send a message to someone else.

What is more concerning is the integration of advance Russian air defence systems into the existing Syrian IADS. These include the Pantsir-S1 (NATO Codename SA-22 Greyhound) which would put the Syrian air defences into a new universe of capability. It is no surprise that Putin is sending a message to the US and the West that he is not prepared to let Assad fall. In return, we can expect that the pay off for this protection is an increased Russian presence in Syria longer term which in all likelihood will turn out to be permanent.

Returning to the cruise missile strike, its been reported by Russia that Iranian and Iraqi permission was sought prior to launch as their transit crossed territory of both of those countries. This reinforces my belief outlined in my previous briefing that we are seeing a Shia triumvirate developing in the northern Gulf region that has the backing of Russia and poses huge threats to Western efforts in that region.

Turkey, although wandering in the wilderness in respect to NATO participation in recent exercises will become increasing important on the European Southern Flank as well as its watchkeeper role on the Black Sea Fleet. This does not help the Kurds who have spent the last 10 years not only building a viable nation but also performing as the US's more reliable partner in the region. If its a choice between a stronger Turkey to bulwark Russian aggression or Kurdish nationhood, sorry but again, I think the Kurds will lose out.

This action could also be seen as a way to complicate Saudi plans to make things difficult for Iran and Syria as well as payback for Saudi attempts to control market share of the oil market (and indirectly skewer the Russian economy). Although it is highly difficult to predict shorter term outcomes in the region and its impact on oil prices, in the medium to longer term, it can only add volatility to oil futures and the reintroduction of an uncertainty premium in pricing.