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Ukraine president Poroshenko tells a news conference in Kiev in September 2014 - "the doors of the E.U. are open to us; I am absolutely convinced of this. Events in Kiev and Brussels gave us a firm hope, a belief, that we will soon get the prospect of E.U. membership." Poroshenko plans to repeal a 2010 law barring Ukraine from membership in any military or political alliance, so that it can apply to join NATO. Clearly Mr. Putin's remark to EU president Barroso that Russia could reach Kiev in 2 weeks has stiffened resolve all over Eastern Europe from Lithuania to Poland, and changed perception in Germany and France about Mr. Putin. The German response from Merkel was to have "a consistent presence" in the Baltic Republics, so that the consequences of threats in Eastern Europe would be made clear to Mr. Putin. Poroshenko says he is in constant communication with Putin about settlement of the situation in eastern Ukraine, showing the costs recognized by all sides to prolonging the conflict....

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This report by David Sanger in the NYT cites insiders in the Obama administration suggesting that the Saudis never really considered the peace talks in the region organized by Secretary of State Kerry as a serious effort with the escalation in the bombing by Russia, and other events including Iran's two ballistic missile tests. Turkey was drawn into the conflict with Russian bombing of ethnic Turkish groups at the border with Syria. By ignoring these events affecting Turkey, Saudi Arabia and other countries, the Obama administration appeared to be calling for a peace effort that seemed to have little prospect of succeeding. As Trofimov suggests in a separate report in the WSJ the Saudis were more focussed on winning domestic support from conservative Sunnis, seeing the Obama administration as ineffective on the issue of refugees from Syria and the conditions for the civilian population.

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Manuel Barroso, president of the European Commission, tells Italian newspaper La Repubblica on September 1, 2014, that Russian president Putin made some abnormal remarks in a phone conversation. Responding to Barroso's question about whether Russian troops had crossed into eastern Ukraine, Putin is reported to say: "That is not the question... But if I wanted to, I could take Kiev in two weeks." The WSJ editorial on September 3 referred to an earlier editorial on "Putin Bonaparte," giving some idea of how such comments by Putin are seen in the media, and how Putin's actions in Ukraine are creating new tensions with the NATO alliance and the U.S.

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With funding from the International Finance Corporation, Bangladesh, Pakistan, and other developing countries with shortfall in energy supplies are building offshore LNG terminals. The demand for LNG in these countries is expected to surpass the demand in developed countries.  IEA estimates show 90% of global LNG demand growth by 2022 coming from these emerging economies. Shortages of electricity in places such as Karachi and Dacca are the reason for the growth. Putting LNG terminals offshore is a viable and economical alternative. Petrobangla is completing a offshore LNG terminal by 2018 with IFC funding. Pakistan completed a floating LNG terminal at Port Qasim in 2015 for importing LNG from Qatar. This terminal alone covers 30% of the needs not met from domestic supplies in Pakistan for gas, according to Engro Elengy data.

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Oil traders are pricing in much higher oil prices- with $150 not being inconceivable- because of Mideast unrest. They see this unrest playing out over a long period of time, and do not see this changing even if the Libyan situation returns to normal tomorrow. Saudi Arabia will need to price oil at $85-90 a barrel just to meet the economic demands for a growing population, says Rachel Ziemba, analyst at Roubini Global Economics. Saudi King Abdullah recently promised $150 billion in new housing, higher wages and other benefits to prevent protests. The fiscal pressures are growing in these countries. A $15-$20 premium for unrest is assigned by Paramount Options, a trader at the New York Mercantile Exchange.

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Denning says that because of the enormous repercusions on Iran's economy of a war in the Persian Gulf, a more likely scenario is not the cutoff of supplies of Iranian oil altogether but a smaller list of buyers for Iranian oil, making Iran sell the oil at a discount. Saudi Arabia's and Libya's added production would bring more oil to the market. The impact will be larger on Europe because of the decline in the value of the euro, with Brent crude on a 12 month average basis costing 14% more now than in the peak price in 2008. By comparison in dollar terms the comparable figure is 4% higher for the U.S. At a price of Brent crude of $120 in 2012, according to Citigroup, energy costs would take up 9% of world GDP, putting pressure on a economic recovery in Europe and the U.S.

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The WSJ's Spencer Jakab points out the role of politics- with Saudi Arabia in a standoff with Iran and Russia in Middle Eastern conflicts- and Saudi policy of full output with no cuts unlikely to change, ensuring lower prices for 2016-2017.

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Russian president Putin tells Russians at an annual news conference on Dec. 17, 2014, that the West wanted to deprive Russia of its natural resources. He says steps taken by the central bank and his administration were proper, including avoiding capital controls, except that the decision to raise interest rates to 17% in mid-Dec. should have been taken earlier. He deflects criticism that the sanctions and the decline in the ruble were "payment for Crimea" (Russia's takeover of the Crimea) by saying it was "payment for our independence, our sovereignty." Putin expressed unease with the expansion of NATO to Russia's borders. He told Russians to expect that the crisis will last for 2 years and during this time the Russian economy will adapt, in particular shifting its heavy dependence on oil exports. During the 10 years of the Putin administration since 2004, Russia has not made a vigorous effort to diversify away from oil dependence. Progress was made primarily in better integrating the economy with the European Union, entry into WTO, building a sovereign reserves fund, until the crisis in Ukraine. The Putin years may be seen in the future as the transition years towards a more diversified economy, and may lead to a shift away from the kind of management of economic and foreign policy by a single leader that may have led to the disruption in relations with Germany, a critical economic partner for Russia. Chancellor Merkel said Germany would continue to support sanctions as long as Russia opposed the right of self- determination of people in Europe and European values. Germany continues even now to maintain dialogue with Russia through Social Democrat Foreign Minister Steinmeier, which is why Putin continues to refer to it as "our partners" and cites the differences with our partners, very different from the Cold War period when no such close relations with Germany existed. ...

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Bret Stephens of the WSJ describes the problems with the deal for removal of chemical weapons in Syria, and sees parallels in the situation with the Iran nuclear deal for inspecting weapons sites.

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The OPEC meeting in Qatar in April 2016 to stabilize oil prices with a freeze in production is not likely to affect supply and demand. Saudis and Russia are producing all out, and Iran plans to increase its production, making it difficult to reach an agreement. The International Energy Agency, IEA, predicts demand will rise by the end of 2016 from 94.8 million barrels a day to 95.9 million barrels a day. Production is at 96.4 million barrels a day, and this is expected to lead to narrowing the gap between supply and demand. Experts say cars are becoming more fuel effficient, and electric car technology is becoming commercially viable, leading to a lack of growth in demand in developed and middle income countries. This may have to be factored in for the intermediate and long run for demand growth.

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A Flash Eurobarometer poll before French elections in 2017 show 56% of Europeans in the EU saying the euro is a good thing, only 36% saying its not, those saying its good at 64% in Germany, and being 57% in Spain, and 53% in France. Walker of the WSJ says the euro has survived the crises of the last few years, with some but not all the steps taken to avoid a repeat of the problems, and public opinion still favoring the eurozone as it looks forward to economic growth in coming years. The middle class is not attracted to risking its savings in euro denominated assets, costs of the turmoil that might be caused by leaving the euro act as a signal for caution, and in Southern Europe countries remember the days before the euro with devaluations and high inflation. With gradual economic recovery it appears that the euro is still the best option there is. Surveys show three fourths of the French oppose leaving the euro, and experts say the euro is not to blame for France's slow economic recovery- more confidence and political stability with economic renewal are seen as the ways to get France going again. This may be why the national elections in France will likely bring a president who is pro-EU. ...

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In a shift from statements at earlier summits which focussed on fiscal restraint, the Camp David summit continued the "firm committment to fiscal consolidation," yet emphasized jobs and economic growth as "imperative." There is new flexibility to address needs for economic growth and no specific timetables for fiscal balance as in previous summits. Obama had many one to one encounters with the other leaders. He discussed the euro crisis with Cameron while working out on a treadmill, and watched the Champions League soccer final between Chelsea and Bayern Munich with Merkel and Cameron. Each leader of the G-8, Harper of Canada, Monti of Italy, Hollande of France, Medvedev of Russia, Cameron of Britain, Noda of Japan, Merkel of Germany, was assigned a cabin in the rustic wooded setting of Camp David's mountains. A special effort was made to see that Germany's Merkel did not feel isolated in the setting because of the growing sentiment that austerity policies pushed by Germany are not working. On Iran, Obama stated that he was "hopeful that we can resolve this issue in a peaceful fashion that recognizes their sovereignty, but also recognizes their responsibilities."...

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U.S. officials confirm the use of Iraqi airspace by Iran to supply arms to the Assad regime in Syria. It showed the lack of U.S. leverage in Iraq as the U.S. leaves Iraq without an agreement.