Higher energy resource prices are beneficial for Russia, but the situation is still not such as to significantly increase the country's military capabilities, said Andris Piebalgs, former European Union Commissioner for Energy and current representative of Latvia in the support group for Ukraine's EU accession, in an interview with LETA.
"Undoubtedly, higher energy resource prices are beneficial for Russia, there is no doubt about that. However, several factors need to be considered," noted Piebalgs.
He reminded that the U.S., in concluding a trade agreement, pressured India not to purchase Russian oil, and although this is not fully adhered to now, "it will not be the case that all Russian oil will now flow to India." The second country currently suffering from the halt of shipping in the Hormuz Strait is China. However, China has oil reserves.
Piebalgs predicted that energy resource prices could start to decline if the insurance system for tankers and liquefied gas vessels proposed by U.S. President Donald Trump, passing through the Hormuz Strait, is implemented. OPEC countries also announced that they would increase oil production.
"This certainly does not mean that prices will drop to the levels that were before the Iranian crisis, but they will not rise significantly either. In summary, the rise in prices is a plus for Russia, but its significance should not be exaggerated, as Russia has many downsides in this situation," said Piebalgs.
He also predicted that the issue of the Hormuz Strait would be resolved; otherwise, it would have a significant impact on the global economy.
Speaking about Iran, Piebalgs reminded that Iranian oil has been under sanctions and transported by the so-called shadow fleet. Therefore, even before the war, Iranian oil did not significantly participate in the market.
"So we need to wait for shipping in the Hormuz Strait to resume. In my opinion, the Gulf countries are also interested in having this resolved. If there is no insurance and something happens, the losses are enormous. If this is resolved and the U.S. and Israel eliminate the possibility of Iran launching missiles by military means, prices should go down," suggested Piebalgs.
In response to the question of how to assess the fact that the EU paid more for Russian energy resources than it provided in financial assistance to Ukraine, Piebalgs acknowledged that "this is a policy where a balance is always sought," and the EU was not confident that it was possible to completely abandon Russian energy resources.
He noted that he personally believes this could have been done. The positive news is that the EU has adopted laws that will cease any purchases of Russian gas starting November 1, 2027, and no exceptions are allowed anymore.
"Finally, this has been done regarding gas. Oil purchases are also moving in the same direction. Could this have been done earlier? Yes, of course, it could have been. However, there is a very big difference in how countries that have a direct border with Russia view this and how it is perceived by France or Spain, or even Belgium, which do not have a direct border with Russia. The weakness of the EU is that political priorities differ in different countries, but the fact that these legislative acts were successfully adopted is a significant factor," emphasized Piebalgs.
