Rosneft Chief Executive Igor Sechin said on Saturday that US energy companies were the biggest beneficiaries from the closure of the Strait of Hormuz, while warning that a prolonged disruption to the vital shipping route could ultimately weaken global oil demand and increase interest in alternative energy sources, according to Reuters.Speaking at the St. Petersburg International Economic Forum, Sechin argued that the closure of the strategic waterway, through which about a fifth of global crude oil supplies pass, has reshaped energy markets in favor of the United States.“Of course, the main beneficiaries were American companies, which gained non-competitive advantages and the ability to secure high-cost supplies,” Sechin said, according to Reuters.He described the closure of the Strait of Hormuz as “an attempt to reshape global energy market rules to benefit the United States”, adding that the steps intended to target Iran had “adverse effects on the entire world” and that the associated strategic risks were underestimated.Also read: Drill, sanction, control: Inside the oil economics driving Trump 2.0
Long-term risks to oil demand warned
Sechin warned that continued instability around the Strait of Hormuz could have wide-ranging consequences for the global energy sector.“Prolonged tensions in the Strait of Hormuz have reduced long-term demand for oil. It could also lead to another surge of interest in alternative energy,” he said.The comments come after Iran blocked the strait, while the United States imposed a blockade on Iranian ports following US and Israeli attacks on the country in February, according to Reuters.
Oil prices could fall if the strait reopens
Sechin said oil prices could gradually decline if the Strait of Hormuz reopens in the near future.According to Reuters, he predicted crude oil prices would remain around $95-$96 per barrel by the end of this year, fall to $80-$85 per barrel within a year and return to broader market fundamentals by the second half of 2027.He also said China appeared to be better prepared for the crisis than most countries because of what he described as a well-planned state policy.However, he warned that other major maritime chokepoints, including Malacca, Bab al-Mandeb and the Strait of Gibraltar, could also face the risk of disruption.
Sechin highlights broader global challenges
“The Beginning of the End or the End of the Beginning: What’s Left at the Bottom of Pandora’s Box?”. In a speech titled, Sechin said that the world faces increasing challenges, including militarization, financial market risks and the depletion of vital resources.“At the bottom of the box, we will inevitably find global shortages of electricity, shortages of food, shortages of copper and other metals and water,” he said.
Questions on the effectiveness of OPEC+
According to Reuters, Sechin also raised concerns over the effectiveness of the OPEC+ alliance, saying the group had lost some of its potential after the exit of countries including the United Arab Emirates and Qatar.He said the alliance’s production has declined from 58 million barrels per day to 37 million barrels per day over the past decade.The Rosneft chief said that while most major OPEC+ members have increased output since the accord was signed in 2016, Russia’s oil output has fallen by 1.5 million barrels per day.“This is a 15% decline that will have to be compensated for by necessary investments of at least 10 trillion rubles,” Sechin said. He said Russia looks forward to greater investment cooperation with OPEC+ member countries in the future.
