U.S.-Russia relations exist across many issue areas and economic sectors. Yet there is virtually no meaningful relationship in one area of tremendous economic and geopolitical importance: oil and gas. The lack of sustained and productive engagement has not meant that there is no tension between the United States and Russia when it comes to oil and gas markets.

The Working Group on the Future of U.S.-Russia Relations announces the publication of its second joint report: “U.S.-Russia Relations and the Hydrocarbon Markets of Eurasia.” Coauthored by Rawi Abdelal (Harvard Business School) and Tatiana Mitrova (Moscow School of Management SKOLKOVO Energy Center), the study sheds light on the realities of the international oil and gas markets and their role in shaping the bilateral relationship.

The authors argue that although virtually no sustained engagement exists between the United States and Russia on oil and gas, “energy issues…serve as an arena for conflict, even though neither country is directly threatened by the actions of the other.” The study examines key aspects of the energy markets—such as the forces driving foreign-direct-investment decisions of firms, the U.S. position on Gazprom’s relationships with its European and Eurasian energy customers, and Europe’s role as Russia’s primary gas export market—and recommends specific measures to promote “a more rational acceptance of international oil and gas realities.” The complete text of the report in both English and Russian is accessible on our website.

“This latest report by Rawi Abdelal and Tatiana Mitrova provides a needed reality check about the nature of energy markets,” said Timothy Colton, the U.S. co-chair of the Working Group and Chair of the Department of Government at Harvard University. “It points out the simple yet frequently overlooked idea that antagonism between the U.S. and Russia need not be inevitable in the energy sphere. The authors’ insights from the business world can guide policy makers from both countries in fostering a climate more conducive to joint investments.”