Putin says energy crisis has arrived but Russia ready to work with Europe

Western powers cut Russian oil and gas over Ukraine war, forcing Russia to sell at discounts to Asia

Russian President Vladimir Putin said on Monday that the US -Israeli war on Iran has triggered a global energy crisis and warned that oil production dependent on transport through the Strait of Hormuz could halt within a month.

Putin said Russia – the world’s second-largest oil exporter and holder of the largest natural gas reserves – was ready to work with European customers if they wished to resume long-term cooperation.

Western powers, however, have sharply reduced reliance on Russian oil and gas over the past four years in response to Moscow’s war in Ukraine and subsequent EU and G7 sanctions. Losing the European market has forced Russia to sell oil and gas at steep discounts to Asia.

Speaking at a televised meeting with government officials and leaders of Russia’s major oil and gas companies, Putin said Russia had repeatedly warned that destabilising the Middle East could trigger an energy crisis with serious global economic consequences – a scenario he said was now unfolding.

Oil prices surpassed $100 per barrel on Monday, reaching levels not seen since 2022, as the Strait of Hormuz – which handles roughly a fifth of global oil and liquefied natural gas flows – has effectively been closed due to the Iran conflict.

"Oil production dependent on the Strait of Hormuz risks halting completely within the next month. It has already begun to decline, and storage facilities in the region are filling with oil that cannot be transported, or is extremely difficult or costly to transport," Putin said.

He urged Russian companies to take advantage of the current situation in the Middle East but cautioned that the spike in prices is likely temporary. Oil and gas revenues account for about a quarter of Russia’s federal budget.

Read More: Putin calls for immediate halt to Iran conflict

G7 nations said on Monday they were ready to take “necessary measures” in response to surging global oil prices, but stopped short of committing to releasing emergency reserves.

"We’re ready to work with Europeans too. But we need signals from them that they are willing to cooperate and ensure stability," Putin added.

Last week, he instructed the government to consider redirecting remaining Russian oil and gas flows away from Europe ahead of the EU’s full ban on Russian fossil fuels.

Before the Ukraine war, Europe purchased more than 40% of its gas from Russia. By 2025, combined sales of pipeline gas and LNG from Russia accounted for only 13% of total EU imports.