Why war in Iran won’t end Europe’s energy independence from Russia

The U.S.-Iran war is a test of Europe’s energy independence from Russia, with world oil and natural gas prices up by around 50 percent. Yet even now, miles of oil and gas pipelines from Russia to Europe lie idle. 

Will Europe genuflect to Russia and beg to resume its pipeline energy supplies? Will the EU fall again into an oil and gas dependency on Russia, with its historical record of influencing defense and foreign policies? Will Russia become a collateral geopolitical winner of the U.S. war on Iran?

The war and energy disruptions are not over, but we are willing to go out on a limb to say that the answer to all these questions is a definitive no. The reasons are basic economics.

First, it makes no financial sense for the European Union and, for that matter, for any other country to reengage Russia on oil. Although Russia has idle pipelines intact to transport oil to Europe, there is no spare Russian oil to bring to the market to patch the Middle Eastern shortfall. After the European embargo of approximately 3.4 million barrels per day of Russian crude oil and petroleum products in 2023, China and India have completely substituted for it by importing this amount by sea, in addition to Russia’s oil to China by pipelines.

Russia exported around 7.5 million barrels per day in February, as much as it could, and every drop has found buyers. If the European Union reengages Russia and the pipeline oil flows resume, this will not add a single drop of oil to the world supply and will not ease world oil prices. It will only juggle suppliers, returning Russian oil to Europe from China and India and rerouting U.S. shale oil from Europe to Asia by sea. 

Russia would benefit from fetching higher oil prices in Europe instead of giving discounts to China and India, but China and India will lose as much by paying market prices to the U.S. There’s no gain to anyone but Russia from reshuffling the current world oil market.

Second, many countries can benefit if Europe reengages Russia on natural gas. It will ease world gas shortfalls and prices. For Europe, however, the trade-off between costs and benefits is hard. The supply conditions couldn’t be more fortuitous. Our calculations of Russian statistical agency data show that Russia decreased its natural gas production by at least 200 billion cubic meters since leaving the European market in 2022 and not finding substitute buyers. But the capacity is intact to add back a volume greater than the currently halted Qatari gas production, which could end the shortages. Several idle pipelines are still intact, even after the explosion of three Nord Stream pipelines.

So resumption would be easy. It was not the EU initiative to cut off Russian gas. Russia itself did so, hoping to blackmail Europe into abandoning Ukraine. But the Russian government is now eager to resume sales; no political strings attached, just say yes.

And here lies the collective action problem. The benefits are dispersed, and many countries will benefit from lower gas prices, but the costs and risks are concentrated in Europe. The community at large will benefit from the new infrastructure, but the nearby homeowners, facing extra noise and congestion, are the least likely to support it. 

Russia, like Saudi Arabia, Iran and other energy producers before it, used disruptions of natural gas supply to Europe as a weapon for political objectives in 2006, 2009, 2014 and 2021-22, on most occasions in the middle of freezing winters. And so the EU countries fully substituted for the Russia embargo by the pipeline gas supply from Norway, the United Kingdom, Azerbaijan and Kazakhstan, and by the liquified natural gas from the U.S., Algeria, Nigeria and elsewhere.

The EU went from receiving 45 percent of its gas imports from Russia in 2021 to just 13 percent in 2025, and this will be phased out completely in 2026 and 2027, starting in April.

The European Union has a big choice to make. Returning to Russian weaponization of energy and risking economic disruptions and dislocations would be a loss of hard-won credibility. There is no indication that Europe will go for it and forfeit its painstakingly acquired energy independence from Russia.

Michael S. Bernstam is a research fellow at the Hoover Institution at Stanford University. Steven S. Rosefielde is professor of Economics at the University of North Carolina at Chapel Hill.

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