STATCOMs provide grid with not only reactive power compensation but auxiliary stability support through exerting influence on the dynamic behavior of Synchronous Generator (SG) during grid power oscillations. In this paper, method of electrical torque analysis is utilized to analyze the mechanism of STATCOM affecting the transient performance of SG when operates in power oscillations suppression mode, and the principles of various control strategies on the equivalent inertia, synchronizing and damping coefficients of the grid are derived. Besides, influential factors and the corresponding influence laws of STATCOM suppressing grid power oscillations are analyzed, laying the foundation of analyzing and designing proper STATCOM control strategies. Simulation and experiment results verify the correctness of the analysis.