Valdai Club

The US attack on Iran sent shockwaves throughout oil markets as prices soared following the closure of the Strait of Hormuz and subsequent critical disruptions in global energy flows. From the chaos emerged three energy leaders that are set to shape market dynamics for years to come, writes Konstantin Simonov, Director General of the National Energy Security Fund.

On July 2, the first day of the international conference Global Energy and International Political Risks co-hosted by the Valdai Discussion Club and Azerbaijans Center of Analysis of International Relations, experts discussed the impact of global political shifts on the world energy sector.

In an ideal world, energy would be an exclusively business matter. However, it acquired such a big role in today’s economy that achieving this ideal seems like a utopia. Energy supply in general and oil and gas trade in particular have always been and will always be inseparable from politics.

Gazprom understands that there have been certain risks in the “life without Ukraine” option since the beginning of 2020. Any failure of the contracts will be unambiguously interpreted as the unreliability of Gazprom as a supplier and is fraught with serious reputation losses. Today the competition in the European market is escalating.

In the coming years, we should not expect any ambitious oil and gas projects with Russian involvement in the Middle East. The Russian companies that have been involved in the Middle East market for quite a while are well aware of its specifics and risks.

Russia had to negotiate with individual countries, not OPEC. Probably, an OPEC-2 is emerging right now.

The Organization of the Petroleum Exporting Countries (OPEC) marks today its 55th anniversary. In light of the upcoming anniversary, the Rossiya Segodnya International Information Agency hosted a round-table conference, the attendees of which assessed the progress achieved by OPEC since its establishment and analyzed prices on the oil market. Moreover, they touched upon conjuncture around the volumes of production, sale and extraction on the oil markets, with regard to the lifting of anti-Iranian sanctions.

Instead of an energy dialogue, EU and Russia have two energy monologues. Europe is afraid of serious conversations, but we need to talk and get our message across. There is still space to negotiate, but it is shrinking.

Recently the conversation in the country turned from politics to the economy. The president’s annual address and press conference focused primarily on the economy. The reason is clear enough: the sanctions and a sharp decline in economic growth have shifted attention to new economic policies.

Russia is forced to build the South Stream pipeline as dealing with Ukraine as a transit country is becoming all but impossible as a result of Kiev’s obstructionist position.