Rosneft chief executive Igor Sechin on Saturday said American energy companies were the biggest beneficiaries of the closure of the Strait of Hormuz, while warning that prolonged disruption in the vital shipping route could ultimately undermine global oil demand and accelerate interest in alternative energy sources, as per Reuters.Speaking at the St. Petersburg International Economic Forum, Sechin argued that the closure of the strategic waterway, through which around one-fifth of global crude supplies pass, had reshaped energy markets in a way that favoured the United States.“The main beneficiaries, of course, were American companies, which gained non-competitive advantages and the ability to secure high-cost supplies,” Sechin said, according to Reuters.He described the closure of the Strait of Hormuz as “an attempt to reshape global energy market regulations to benefit the United States,” adding that measures intended to target Iran had “backfired on the entire world” and that the associated strategic risks had been underestimated.Also read: Drill, sanction, control: Inside the oil economics driving Trump 2.0
Warns of long-term risks to oil demand
Sechin cautioned that continued instability around the Strait of Hormuz could have broader consequences for the global energy sector.“Continued tension in the Strait of Hormuz for a long time undermines the long-term demand for oil. It may also trigger another surge of interest in alternative energy,” he said.The comments come after Iran blockaded the Strait following US and Israeli attacks on the country in February, while the United States imposed a blockade on Iranian ports, according to Reuters.
Oil prices could ease if Strait reopens
Sechin said oil prices could gradually decline if the Strait of Hormuz reopens in the near future.According to Reuters, he projected crude prices would remain around $95-$96 per barrel by the end of this year, fall to $80-$85 per barrel within a year, and return to broader market fundamentals by the second half of 2027.He also said China appeared better prepared than most countries for the crisis because of what he described as a well-planned state policy.However, he warned that other key maritime chokepoints, including the Malacca, Bab el-Mandeb and Gibraltar straits, could also face disruption risks.
Sechin highlights broader global challenges
In a speech titled “The beginning of the end or the end of the beginning: what is left at the bottom of Pandora’s box?”, Sechin said the world was facing mounting challenges, including militarisation, financial market risks and looming shortages of critical resources.“At the bottom of the box, we will inevitably find a global shortage of electricity, food shortages, copper and other metals, and water shortages,” he said.
Questions OPEC+ effectiveness
Sechin also raised concerns about the effectiveness of the OPEC+ alliance, saying the group had lost part of its potential following the exit of countries including the United Arab Emirates and Qatar, according to Reuters.He said the alliance’s production had declined from 58 million barrels per day to 37 million barrels per day over the past decade.The Rosneft chief noted that while most major OPEC+ members have increased production since the agreement was signed in 2016, Russia’s oil output has fallen by 1.5 million barrels per day.“This is a 15% decline that will need to be offset by necessary investments of at least 10 trillion rubles,” Sechin said, adding that Russia expects greater investment cooperation with OPEC+ member states in the future.
