Russian President Vladimir Putin warned on Monday (local time) that the US-Israel war over Iran has thrown global energy markets into crisis, saying oil flows through the Strait of Hormuz could be completely halted in the coming weeks. He also said that Russia is ready to restore long-term energy cooperation with European countries if they show interest in rebuilding relations.Speaking during a televised meeting with senior government officials and executives from Russia’s major oil and gas companies, Putin said the situation in the Middle East had begun to disrupt global supplies, causing oil prices to rise sharply and threatening wider economic consequences.
Oil prices climbed above $100 a barrel a day earlier, reaching their highest level since 2022. The surge comes after the effective closure of the Strait of Hormuz due to the war involving Iran. The narrow waterway is responsible for transporting approximately one-fifth of the world’s oil and liquefied natural gas supplies.Putin said Moscow had long warned that instability in the Middle East could cause serious disruption in global energy markets, warning that such a scenario was now looming.“Oil production dependent on the Strait of Hormuz is at risk of completely stopping within the next month. It has already begun to decline, and storage facilities in the region are filling up with oil that cannot be transported…extremely difficult to transport, or extremely expensive to transport,” Putin was quoted as saying by Reuters.He further said that Russia, which is the world’s second largest oil exporter and has the largest natural gas reserves, could benefit from the current market conditions. The Russian president urged Moscow’s energy companies to be prepared to take advantage of the development. Commenting on oil prices, Putin said the increase may prove to be temporary. Oil and gas revenues account for about a quarter of Russia’s federal budget income.Putin also said that Russia would be ready to rebuild energy ties with European countries if they show interest in restoring long-term cooperation.Putin said, “We are ready to work with the Europeans as well. But we need some signals from them that they are ready and willing to work with us and ensure this stability.”European countries have significantly reduced their dependence on Russian oil and gas since Moscow started the war in Ukraine. Over the past four years, Western governments, including the EU and the G7, imposed sanctions and cut dependence on Russian energy supplies.This change has been costly for Moscow. Europe was previously one of Russia’s most profitable markets, and the loss of that demand has forced Russian producers to sell oil and gas at deep discounts to Asian buyers.Last week, Putin instructed the Russian government to investigate the possibility of diverting remaining energy flows away from Europe ahead of the EU’s plan to completely ban Russian fossil fuel imports.Before the Ukraine war, more than 40% of Europe’s gas imports came from Russia. However, by 2025, Russian pipeline gas and liquefied natural gas will account for only 13% of total EU imports.Meanwhile, Group of Seven (G7) countries on Monday said they were prepared to take “necessary measures” to tackle rising global oil prices, although they did not announce the release of emergency reserves.
