The armed conflict in the Middle East may lead to a shift in the balance of supply and demand in the global oil and gas market, creating conditions for the reorientation of Russian energy supplies. President Vladimir Putin stated this during a meeting on the situation in the global oil and gas market on March 9.

The meeting was preceded by a sharp increase in global oil and gas prices. On March 9, the price of May futures for Brent crude oil exceeded $115 per barrel for the first time since late June 2022, reaching $118.7 per barrel, according to ICE exchange data. By 20:45 Moscow time, the price adjusted to $99.5 per barrel. The price of April futures for gas at the TTF hub in the Netherlands surpassed $800 per 1,000 cubic meters for the first time since mid-January 2023, peaking at $824, before adjusting to $671. For comparison, on March 6, the price of oil was $92.7 per barrel and gas was $641 per 1,000 cubic meters, while on February 27 (before the start of the U.S. and Israeli armed conflict with Iran), it was $72.9 per barrel and $390 per 1,000 cubic meters respectively.

The rise in oil prices accelerated following reports of production cuts in Kuwait due to overflowing storage facilities. Another driver was Qatar's energy minister's forecast, which suggested a halt in production across all countries in the Persian Gulf. The increase in gas prices was hastened by QatarEnergy's announcement on March 2 regarding the suspension of liquefied natural gas (LNG) production in Qatar. The effective cessation of shipping in the Strait of Hormuz, which connects the Persian Gulf with the Gulf of Oman in the Indian Ocean, has led to a surge in tanker freight rates in the Middle East to record levels, as reported by "Vedomosti" on March 4.

During the meeting, Putin noted that the current high commodity prices are temporary. However, global supply chain logistics amid the ongoing conflict in the Middle East will shift toward more advantageous and promising markets, as the changes in the balance of supply and demand for hydrocarbons brought about by the current situation will lead to a new sustainable price reality, he emphasized.

According to Putin, logistical issues in hydrocarbon transport routes are having a "most negative" impact on supply chains and the entire system of international economic relations. Disruptions in supplies lead to economic difficulties, rising inflation, and a decline in industrial production, the president explained.

He pointed out that in 2025, about one-third of the world's maritime oil exports—14 million barrels per day—transited through the Strait of Hormuz, with approximately 80% destined for Asia-Pacific countries. At the same time, he noted that a complete reorientation of Middle Eastern oil supplies without using the Strait of Hormuz is impossible. Changes in logistics will require significant infrastructure investments, expansion of maritime terminals, and will be associated with high political risks, Putin explained.

A similar situation is emerging in the global gas market, according to him: LNG supplies from the Middle East have sharply decreased, and it is impossible to quickly compensate for the lost volumes.

The president highlighted that the dynamics in the global oil and gas market are such that a rapid reorientation of exports to markets in need of increased supplies may establish a foothold in those markets. These are states with stable long-term demand and "reliable long-term relationships," Putin noted.

He reminded that Russia is a reliable supplier of energy resources and will continue to supply oil and gas to countries that are trustworthy partners. These not only include Asia-Pacific countries but also Eastern European states like Slovakia and Hungary, he clarified. At the same time, he recalled that the European Union plans to abandon energy resource purchases by 2027. In this regard, the government has been tasked with evaluating the feasibility of halting energy resource supplies to the European market and redirecting those volumes to "more interesting directions" in order to secure a presence in those markets, he emphasized. The president did not rule out that Russia might continue to supply oil and gas to Europe if it receives signals from Europe regarding a willingness to dismiss the political context in this sphere.

The ongoing rise in oil and gas prices is largely attributed to a reevaluation of risks by insurance companies, which have effectively stopped covering force majeure events for shipments through the Strait of Hormuz, according to Sergey Tereshkin, CEO of Open Oil Market. Furthermore, price increases have accelerated against the backdrop of attacks on oil and gas facilities, noted Maxim Shaposhnikov, advisor to the manager of the "Industry Code" fund, and Igor Yushkov, an expert from the Financial University under the Government.

Experts predict that Brent oil prices will stabilize around $100 per barrel in the coming days. In the short term, prices could spike to $150 per barrel, but these would be temporary jumps, Shaposhnikov notes. Yushkov agrees, stating that later the price might drop to $80-85 per barrel, according to Shaposhnikov.

Read more: VEDOMOSTI