Gas and ready: Russia's withdrawal to more profitable markets will be a disaster for the EU

According to experts interviewed by Izvestia, a change in the direction of Russian gas supplies to more profitable markets will lead to disastrous consequences for Europe. Russian President Vladimir Putin will instruct the government to work on this issue without waiting for a complete ban on the supply of domestic fuel from the EU. Meanwhile, the cost of another type of raw material, Urals oil, has already exceeded the "ceiling" set by Western countries and reached $60 per barrel when shipped from Russian ports in connection with the conflict in Iran. Supplies at the new price are already being carried out from the port of Primorsk and are heading to India and China, informed sources told the editorial office. About how the Russian Federation is diversifying its energy supplies and what contributes to this is in the Izvestia article.

How did the President of the Russian Federation assess the situation in the energy markets

Russia has decided not to wait for a complete ban on domestic gas supplies to the EU and redirect this fuel to premium markets. This was stated by Russian President Vladimir Putin. Commenting on the rising cost of fuel in the European Union, in a conversation with Vesti correspondent Pavel Zarubin, the head of state stressed that American gas suppliers are likely to switch from the European market to other regions where higher prices are offered for fuel.

— It's natural. There is nothing here, there is no political background. Just business, that's all," the Russian leader noted. — I will definitely instruct the government to work on this issue together with our companies.

On March 4, at the extraordinary meetings of the gas coordination group and the oil coordination group, the European Commission (EC) and the EU countries discussed ensuring the security of supplies of these fuels to the region. As a result, the EC stated that "they do not observe any immediate risks to the security of supplies." However, "in the event of a prolonged closure of the Strait of Hormuz or further disruptions, the security of supplies to the EU will be reviewed."

As Izvestia wrote, the European Union is likely to postpone the ban on short-term LNG contracts with the Russian Federation, which is scheduled to begin on April 25, 2026, and with negative developments for the global LNG market, the ban on long-term contracts, which comes into force on January 1, 2027, will also be postponed.

However, Moscow decided to be proactive, without waiting for dubious concessions from the West.

"If you have any questions, please contact Ursula [von der Leyen], Kaye [Callas] and other Russophobes," Kirill Dmitriev, head of the Russian Direct Investment Fund and special representative of the President of the Russian Federation, commented on the possible termination of supplies to the EU.

According to experts, the withdrawal of domestic gas from the European market will be a real disaster for the EU, because there is still no alternative to it.

"Despite the fact that the European Union has been striving to abandon Russian gas for four years, it has not been possible to achieve this goal," Vladimir Shapovalov, deputy director of the Institute of History and Politics at Moscow State University, told Izvestia.

The expert stressed that domestic fuel, primarily LNG, is essentially the basis of the European energy market. And now, if the crisis in the Middle East lasts for a certain time, the economies of the EU countries may collapse.

He recalled that the EU had tried to influence our economy by rejecting Russian gas. Now this situation may unfold in exactly the opposite way, and the Russian Federation will abandon the European markets and thereby deal a huge blow to the economies of the countries of this region, the expert added.

Oleg Karpovich, head of the Department of the MGIMO Diplomatic Academy of the Russian Foreign Ministry, did not rule out that the president's decision would put additional pressure on EU countries that were trying to unleash an energy war against Moscow. Of course, in the current conditions, Moscow should not think about the well-being of the Old World, but about the states of the world majority that need Russia's help.

— In these circumstances, unfriendly governments will have to think about their behavior and stop the hybrid war against Moscow. This decision will affect the Russian Federation only in a positive way, maximizing our energy security," the political scientist believes.

The EU countries that are most dependent on Russian natural gas may experience price increases, which will affect the mood of voters and complicate the already tense political situation, German political analyst Egor Belyachkov believes. According to him, first of all, this is relevant for certain Eastern and Central European countries.

How is the price and demand for Russian oil changing?

Meanwhile, the price of Urals oil exceeded the "ceiling" and reached $60 per barrel when shipped from Russian ports amid the conflict in Iran. This was reported to Izvestia by two sources in the industry. Supplies at the new price are already being carried out from the port of Primorsk and are heading to India and China, the interlocutors added.

Back in 2022, Western countries imposed a price cap on our oil. The essence of the restrictive mechanism is that if a company registered in the EU, G7, UK, USA and Japan wants to provide transportation services or brokerage, financial and technical services for Russian raw materials, then this can only be done if the price of the raw materials sold is not higher than $ 60 per barrel. In September 2025, Western countries lowered the ceiling from $60 to $47.6 per barrel, and from February 2026, the limit was $44.1. In response, the Russian authorities banned the export of oil and petroleum products at the price ceiling.

Joint US and Israeli strikes on Iran began on the morning of February 28 and included massive air and drone attacks on hundreds of targets in the country, primarily in Tehran and the west. Iran almost immediately responded with large-scale missile strikes that affected not only Israel, but also a number of Persian Gulf states where American military facilities are located. The Iranian command announced attacks on 14 US bases in the Middle East. It was reported that explosions and the operation of air defense systems were heard in Bahrain, Qatar, Jordan, Iraq, Saudi Arabia and the United Arab Emirates.

"Before the US and Israeli attacks on Iran, as of February 27, 2026, discounts on marker grades of domestic oil from the cost of Brent were at the level of $34-35 per barrel for Urals grades shipped from the ports of Primorsk, Ust—Luga, Novorossiysk, and the discount level itself was 48-49% of the cost of the reference grade," she said. Tamara Safonova, General Director of the Independent Analytical Agency for the Oil and Gas Sector, told Izvestia.

After the escalation of the conflict in the Middle East region and the involvement of the Persian Gulf oil exporting countries, the risks of damage to ships as a result of military operations, and the suspension of a number of oil and gas producing and refining enterprises, an aggressive increase in world prices began, the expert said.

On March 4, Deputy Commander of the Iranian Islamic Revolutionary Guard Corps (IRGC) Mohammad Akbarzadeh said that the Iranian military had destroyed ten tankers in the Strait of Hormuz.

The conflict has led to the fact that the cost of renting the world's largest tankers has reached a historical record, the media reported. Freight rates on the key Middle East—China route exceeded $480,000 per day, having increased fourfold since mid-February.

Due to the shortage of resources, a sharp increase in the cost of tanker freight and insurance from the Middle East region, the attractiveness of Russian oil supplies has increased and discounts have decreased, which can currently be estimated for Urals grades at 25-30% of the benchmark value, Tamara Safonova added.

Before the escalation of the situation in the Middle East, domestic raw materials were trading at a significant discount to Brent for a long period of time. Among the key factors were sanctions restrictions and the price ceiling imposed by Western countries, restrictions on tanker insurance and freight, restructuring of export flows, reputational and sanctions risks for buyers, said Yuri, deputy chairman of the State Duma Committee on Energy. Stankevich.

— The escalation around Iran has indeed acted as a powerful pro-inflationary factor for the oil market. If tensions persist, the premium may be held in quotes for several weeks or months. In the short term (the coming month), much will depend on the scale of the involvement of the United States and regional players, threats to shipping, the reaction of OPEC+, and stock dynamics in the United States and China. While maintaining tension, Urals can trade in the range of $60-70 per barrel, depending on the dynamics of Brent and the discount rate," said Yuri Stankevich.

Urals follows Brent with a lag and adjusted for discount: if Brent is fixed above $ 80, Urals may well be stable above $ 60 for shipments from Russian ports, the deputy explained. ⠀

At the same time, the price is already quite high — on March 4 at 18:30 Moscow time, the May Brent futures were trading at about $80.7 per barrel, although in early February the price of black gold was below $70, according to ICE trading data.

What can limit the replenishment of the Russian budget

The growth rate of revenues from commodity exports will still be limited by the sanctions pressure, said Dmitry Gusev, Deputy Chairman of the Supervisory Board of the Reliable Partner Association.

According to Ekaterina Kosareva, managing partner of VMT Consult, firstly, Russia is bound by obligations to OPEC+ and will not be able to increase production in order to replace, for example, Iranian oil supplies, which amounted to 1.5-2 million barrels per day. Also, the capabilities of our exporters are limited by sanctions against the so-called "shadow" fleet, the expert added. She did not rule out the introduction of new measures by the West against financial institutions, which could disrupt the established payment system, even though today more than 90% of payments for domestic raw materials are made in yuan.

The risks of possible seizures of ships flying the flags of other countries related to the supply of raw materials may also become a deterrent to the growth of Russian budget revenues from exports, an industry source added.

Tamara Safonova also recalled that during the period of sanctions against Russian oil, Indian companies delayed payments for raw materials, as the settlement system was not set up. It was also reported that in 2025, Indian banks began to delay payments due to the imposed US sanctions: disputes arose over the timing of closing energy deals or mooring tankers.

— The previous sanctions restrictions have not gone away. In particular, the greatest pressure was previously exerted on India, which, under the threat of high US customs duties, was forced to slightly reduce the purchase of Russian oil. And although New Delhi has stated that energy cooperation with the Russian Federation will continue, the fact remains that some of the flows had to be redirected to other areas, primarily to China," said Valery Andrianov, associate professor at the Financial University under the Government.

In addition, high dependence on the Chinese market does not help reduce discounts, the expert added. Russia does not yet have an alternative major oil buyer, he said.

At the same time, on March 4, the Ministry of Finance announced that it would not conduct currency transactions in the first spring month due to changes in the base cost of raw materials.