Most powerful energy crisis in human history is looming – Putin envoy

The world is heading toward the most severe energy crisis in history and Europe is unprepared, Kremlin envoy Kirill Dmitriev has said. The warning comes as the escalating conflict in the Middle East has driven volatility in global energy markets.

Speaking on Thursday, Dmitriev – who heads the Russian Direct Investment Fund (RDIF) and is President Vladimir Putin’s special envoy for investment and economic cooperation – said he earlier predicted that oil would exceed $100 a barrel if a conflict like this broke out. 

“Back then, no one believed,” he said, adding that some market participants are now discussing the possibility of prices rising to $150 or even $200.

“We see that the most severe energy crisis in the history of mankind is approaching. Neither the EU nor the UK is at all prepared for it,” Dmitriev said on the sidelines of the RDIF congress. Brussels and London “shot themselves in the foot” by rejecting Russian oil and gas, and the consequences of this are only beginning to emerge, he added.  

Dmitriev warned that the EU faces deindustrialization, and that “big problems” await the UK, arguing that this the result of choices made by European Commission President Ursula von der Leyen and other “Russophobic politicians.” 

Western governments will eventually be forced to seek renewed access to Russian energy, he said.

Oil and gas prices have spiked since the escalation of the Middle East conflict, triggered by the US-Israeli strikes on Iran and subsequent Iranian retaliatory attacks across the region, which have led to the effective closure of the Strait of Hormuz to Western shipping. 

The strait normally carries around a fifth of the world’s daily oil supply, and the IEA has warned that disruptions could last months or years. European gas prices have risen by around 70% since March 1; Brent crude has topped $110 per barrel, prompting Washington to ease the sanctions on Russian oil.

The EU was already grappling with the fallout from its decision to cut energy ties with Russia following the escalation of the Ukraine conflict, as well as the costs of its green transition policies. 

The European Commission has said there will be no return to Russian energy, and it will continue to pursue a full phase-out of Russian fossil fuels by 2027. This week, however, it put plans for a complete ban on Russian oil on hold, due to what some officials reportedly called “current geopolitical developments.”