Putin says Russia open to Europe dialogue as forum draws 30 Saudi deals

Russian President Vladimir Putin said Moscow does not refuse dialogue with Europe, blaming the continent for halting energy purchases and seeking Russia's collapse, as St. Petersburg hosted its annual economic forum under a cloud of Ukrainian drone strikes.

"The problem is that Europe refuses to buy Russian energy and wants Russia to suffer a strategic defeat," Putin said Thursday during a meeting with heads of major news agencies at the St. Petersburg International Economic Forum, adding that Russia would only negotiate with European counterparts it trusts. "How can Russia trust people who have been harping about the need to inflict a strategic defeat on Russia for years?" he asked, switching to German for emphasis.

The comments came hours after Ukrainian long-range drones struck an oil terminal in St. Petersburg and set a Russian guided-missile corvette ablaze at the Kronstadt naval base, sending smoke over the city where Putin was born. Russia's Defense Ministry said air defenses downed 354 Ukrainian drones overnight. Putin acknowledged some drones "break through" and pledged to strengthen Russia's air defenses.

The juxtaposition of diplomatic overtures and intensifying strikes underscores the widening gulf between Russia and Europe four years into the war. With Western investors largely absent from the forum — once styled as Russia's Davos — Moscow is pivoting east, with Saudi Arabia attending as special guest and signing 30 new private-sector cooperation agreements across industry, education, tourism, and energy.

Energy Realignment Accelerates

Saudi Energy Minister Prince Abdulaziz bin Salman told the forum the world "needs every molecule of energy" and that the Kingdom remains a flexible supplier under all circumstances. His appearance marked a strategic silence broken — he said he had deliberately refrained from commenting during the recent global energy crisis because "panic makes a person lose control of the narrative."

Russian Deputy Prime Minister Alexander Novak warned of a hidden shortfall of about 12 million barrels per day that are currently not reaching global markets, cautioning that if the Middle East conflict continues and Gulf states delay increasing production, the market will face an acute physical shortage within months. OPEC Secretary General Haitham Al Ghais said the organization still expects robust demand growth of 1.2 million barrels per day this year despite the closure of the Strait of Hormuz.

The last time Russia and Europe faced a comparable energy standoff was during the 2022 gas supply cuts, when European benchmark TTF prices surged above 300 euros per megawatt-hour and the euro fell to parity against the dollar. European Union countries have since diversified supply, with U.S. LNG and Norwegian pipeline gas replacing roughly 80 percent of former Russian pipeline flows, according to Bruegel data.

Market Implications

For investors, the key question is whether Putin's overture signals any genuine willingness to reengage or merely tactical positioning. The St. Petersburg forum's diminished Western attendance — a U.S. official from the Commission of Fine Arts attended for the first time in years, but major Western investors stayed away — suggests the decoupling is entrenched. Brent crude prices remain sensitive to any supply disruption, with the Strait of Hormuz closure adding a risk premium that options markets are pricing at elevated levels.

Putin is scheduled to deliver a keynote address Friday, where he is expected to minimize Russia's economic challenges. The government has raised taxes and increased domestic borrowing to keep its budget deficit under control as the initial boost from military spending fades. NATO Secretary-General Mark Rutte, visiting Kyiv on Wednesday, said young Russians "are being sold a raw deal" by Moscow, as poor training and equipment lower survival chances on the battlefield.

This article is for informational purposes only and does not constitute investment advice.