strategic consequences far outweigh the short-term implications for oil prices

Geography Lesson - future of Georgia's independence

Oil ends below $115 in tug of war with supply, demand concerns - MarketWatch: "Geography lesson
In regard to the conflict in Georgia, 'the strategic consequences far outweigh the short-term implications for oil prices,' said James Williams, an economist at WTRG Economics.
'While South Ossetia has generally fallen into the Russian sphere of influence and there is a certain logic to the Russian invasion of Ossetia, it appears that the Russians are not satisfied with that conquest and have recently taken Gori to the southeast of Tskhinvali the capital of South Ossetia,' he said in emailed comments.
'That means they have covered about 40% of the distance between Tskhinvali and the Georgian capita Tbilisi,' he explained. 'This is undisputed Georgian territory and the strongest indicator yet that Russia may intend to occupy all of Georgia.'
Williams also points out that the Baku-Tbilisi-Ceyhan pipeline, which was built to allow exports from Azerbaijan's Azeri-Chirag-Guneshli oil field in the Caspian Sea as well as oil from Kazakhstan's Kashagan oil field and other oil fields in Central Asia, runs along the southern border of Georgia.
'If they take the entire country, Russia will have a stranglehold on Caspian exports to Europe,' Williams said.
Even so, in the face of this, oil prices are lower, he said. 'Two months ago this would have cause a $5 to $10 increase in prices over a two- to three-day period,' he said. 'Instead prices are down again. There can be no clearer sign that we have entered a bear market for crude oil.'"