Russian President Vladimir Putin said on Monday that oil production reliant on transport through the Strait of Hormuz could halt completely within a month, as the U.S.-Israeli war on Iran has triggered a global energy crisis.

Putin warned that oil output dependent on the strategic waterway has already started to decline, with storage facilities in the region filling up with oil that cannot be transported or is extremely expensive to move.

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

Speaking at a televised meeting with government officials and heads of Russia’s leading oil and gas producers, Putin said that Russia had repeatedly warned that destabilizing the Middle East could lead to an energy crisis with serious implications for the global economy.

The Russian president said his country, the world’s second-largest oil exporter and holder of the biggest natural gas reserves, was ready to resume cooperation with European customers if they wanted to return to long-term partnerships.

Putin said Russian companies should capitalize on the current situation in the Middle East, though he noted that the spike in prices was likely temporary. Oil and gas revenues account for around a quarter of total federal budget proceeds.

Western powers have spent the past four years sharply reducing their dependence on Russian oil and gas following Moscow’s war in Ukraine and subsequent EU and G7 sanctions. The loss of the European market has forced Russia to sell oil and gas at steep discounts to Asia.

Putin said Russia needs signals from Europeans that they are ready and willing to work with Moscow and will ensure sustainability and stability in energy cooperation.
Source: Investing.com