Donald Trump's tactic to end the Ukraine war — and whether it would impact Australia

Ahead of a slated overnight meeting, the US president is urging oil-producing nations to "bring down" oil prices as a way of putting pressure on Russia to end the war in Ukraine.

Donald Trump stands in front of a US flag

US President Donald Trump had vowed to end the war in Ukraine during his campaign, but the timeline to resolve the conflict is unclear. Source: AAP / Evan Vucci/AP

US President Donald Trump has his sights set on oil prices as a way of targeting Russia's finances to end its war in Ukraine.

Trump reiterated calls for the Organization of the Petroleum Exporting Countries (OPEC+) to "drop the price of oil", ahead of a scheduled meeting on Monday night (AEDT), after which he has said "that war will stop right away".

OPEC+'s meeting of its Joint Ministerial Monitoring Committee will review and assess oil production levels.

Professor Wesley Widmaier, from the Australian National University's international relations department, said while Trump's approach could present a "reasonable" worldview, it must be considered within the context of the war and the interests of OPEC+ member nations.

Mick Ryan, a senior fellow for military studies at the Lowy Institute, said a range of issues would need to be resolved to give Trump's counterpart, Russian President Vladimir Putin, a reason to end the war.

What has Donald Trump said?

The US president said he would ask Saudi Arabia and other OPEC+ nations to "bring down the cost of oil" during a virtual address to the World Economic Forum in Davos, Switzerland, late last month.

"If the price came down, the Russia-Ukraine war would end immediately," he said.

"Right now, the price is high enough that that war will continue. You [have] got to bring down the oil price; you’re going to end that war. They should have done it long ago."

Trump's remarks followed a conversation with Saudi Arabia's Crown Prince Mohammed bin Salman, during which the White House said the kingdom's "international economic ambitions" as well as trade issues were discussed.

According to the Saudi State news agency, the kingdom wants to put US$600 billion ($980 billion) into expanded investment and trade with the US over the next four years.

"But I'll be asking the crown prince, who's a fantastic guy, to round it out to around $1 trillion ($1.6 trillion)," Trump told the forum. "I think they'll do that because we've been very good to them."
A chart showing the price of US crude oil from 2002 to 2024.
The price of US crude oil, from 2002 to 2024. Source: SBS News
Trump later reiterated his call for OPEC to cut oil prices when speaking to reporters in North Carolina.

"One way to stop it quickly is for OPEC to stop making so much money and drop the price of oil ... That war [in Ukraine] will stop right away," Trump said.

Saudi Arabia is the "market maker" of OPEC+, Widmaier said. The intergovernmental organisation has a stated objective to "coordinate and unify petroleum policies of its member countries" and "ensure the stabilisation of oil markets" to secure a regular supply to consumers.

OPEC was formed in 1960 by Iraq, Iran, Kuwait, Saudi Arabia and Venezuela, and now has 12 member countries. In 2016, a grouping of oil-producing countries including Russia, Kazakhstan and Mexico become part of OPEC+, which works with OPEC on oil initiatives.

How could lowering oil prices end the war in Ukraine?

Russia is among the world's top three oil producers, behind the US and Saudi Arabia, according to the US Energy Information Administration.

In 2023, the country produced 10.75 million barrels of crude oil and all other petroleum liquids per day — or 11 per cent of total world production.

It's also among the top oil exporters, according to OPEC's 2024 Annual Statistical Bulletin.

Oil prices have risen this year, with Brent crude oil reaching almost $83 a barrel on 15 January and settling at its highest since August, supported by concern about the supply impact of US sanctions on Russia that were announced in January.

OPEC+ members are currently holding back 5.85 million barrels per day of output, equivalent to about 5.7 per cent of global supply, in a series of steps agreed since 2022 to support oil prices.

The group already has a plan in place to start raising oil output from April, gradually unwinding previous cuts. That plan had been delayed several times due to weak demand.
A chart showing the world's top exporters of crude oil in 2023.
The world's top exporters of crude oil in 2023. Source: SBS News
Broadly speaking, Widmaier said this an area where Trump's worldview is most appropriate.

"You're talking about dealing with countries — and specifically Saudi Arabia — where countries do possess market power, where an increase in oil production by OPEC could affect global oil prices ... It's not entirely misplaced," he said.

"But then there's two further things to consider: Will they do that? And will it have an effect on Putin? In each one of those cases, I'm inclined to say no."

Widmaier said decisions on oil prices tend to be local in nature — and responses to international needs are rare.

"Even if they [the Saudis] were to do it, you would have to wonder that it would have the effect on Putin."
Ryan agreed, saying he finds it "hard to believe that OPEC will just drop its rate, unless there is some kind of inducement from the US president".

"At the end of the day, it might reduce Russia's foreign export income. But we should recall Russia went into this war with massive reserves, and it can continue to draw on those reserves for some time to come," he said.

Ryan called it "very unlikely" that countries such as India and China would stop buying energy from Russia.

"It could have an impact. But I doubt very much it will have the significant impact that the current US administration is describing it would have."

What has Russia — and OPEC+ — said?

Late last month, Russia insisted a negotiation on Ukraine could not be made by a drop in oil prices.

"The conflict doesn't depend on oil prices," Russian government press secretary Dmitry Peskov said in a conference call with reporters.

"The conflict is ongoing because of the threat to Russia’s national security, the threat to Russians living on those territories and the refusal by the Americans and the Europeans to listen to Russia’s security concerns. It’s not linked to oil prices.”

Delegates from OPEC+ told Reuters over the weekend that it is unlikely to alter existing plans to raise output gradually when it meets on Monday.
The oil price remarks follow recent threats from Trump to ramp up economic measures

However, Ryan said sanctions and energy prices are only one part of the picture.

"While sanctions, and the economic dimensions of this war are important, the economic dimension alone is not going to end this war," he said.

"There's a whole range of military, societal, political and alliance issues that also need to be resolved to give Putin a reason to want to end this war."

What impact would failing oil prices have in Australia?

If oil prices were to fall, Ryan said this could potentially reach Australia.

"It'd be nice to be able to fill up the car for less than $2 a litre, wouldn't it?" he said, adding the tactic — if successful — could also impact Trump's popularity in the US.

"Just like it is in Australia, it's one of those things that people watch constantly. It has an impact on inflation," he said.

"Cheaper fuel prices have an impact not just on normal citizens, but businesses and farmers. So it's hard to see how that would not be popular."

With additional reporting by Reuters.

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7 min read
Published 3 February 2025 5:31pm
By Emma Brancatisano
Source: SBS News


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