The Russian squeeze of the energy supplies has prompted the Europeans to scamper for new alternatives, and their attention is increasingly shifting to Iran.
A French presidency official said on Monday that the international community should explore all options to alleviate the crunch that has spiked prices, including talks with producing nations like Iran and Venezuela.
French President Emmanuel Macron indicated Europe’s panic when he said he had been told by the UAE's president that two top OPEC oil producers, Saudi Arabia and the United Arab Emirates, can barely increase oil production.
The two Persian Gulf Arab states were widely perceived as the only two countries in the Organization of the Petroleum Exporting Countries (OPEC) with spare capacity to boost global deliveries that could reduce prices.
But Macron was heard telling US President Joe Biden on the sidelines of the G7 summit that UAE leader Sheikh Mohammed bin Zayed al-Nahyan had told him neither country could raise their output.
"He told me two things. I'm at a maximum, maximum production capacity. This is what he claims," Macron said. "And then he said the Saudis can increase by 150,000 barrels per day. Maybe a little bit more, but they don't have huge capacities before six months' time."
Macron and other European leaders are reportedly urging the Biden administration to return to talks with Iran on bringing the US back to compliance with a 2015 nuclear deal which his predecessor Donald Trump abandoned in 2018.
According to RBC Capital Market's Helima Croft, the push makes sense and if a breakthrough is reached, an additional 1 million barrels per day (bpd) of Iranian exports could potentially come online.
"Every barrel matters in this market," she said.
The Americans, however, are unpredictable. About a year since the Biden administration returned to the Iran talks with an express aim of undoing the past wrongs, it has yet to take a meaningful measure.
While the Europeans are in a race against time, the United States is in a comfortable position. According to leading energy analyst Dan Yergin, America is more than happy to displace Russia as the world’s leading exporter of energy.
The US now sees itself in a better position as a big exporter of energy, and its desire is not to isolate just Russia but also Iran and Venezuela.
However, higher energy prices are a pain for American consumers and US production alone cannot protect its consumers from rising global oil prices. The plan B for the United States is to use the capacities of allies such as Saudi Arabia. The US president is off to the kingdom next month to appeal to the Saudis to pump more oil.
Macron’s announcement about the inadequacy of the Saudi and UAE capacities appears timed to bring the Americans out of their delusion, but it remains to be seen if the US will take heed.
Meanwhile, Europe is the only party in distress. Russia is fighting back against Western sanctions by restricting the supply of gas to Europe and the prospect of a total cut-off of Russian gas is causing near panic in Europe.
Germany and other major economies contemplate energy rationing this winter. Europe's biggest economy on Thursday activated the second phase of its three-stage gas emergency program, taking it one step closer to rationing supplies to industry.
The step would deliver a huge blow to the manufacturing heart of its economy. Twelve EU countries have so far been affected by Russian gas supply cuts, the bloc's climate policy chief Frans Timmermans said.
Russia is finding alternative markets, and the world’s largest oil customers India and China are eagerly increasingly imports of discounted Russian oil.
Sri Lanka which is facing a serious fuel crisis said earlier this week that it was sending two ministers to Russia to negotiate for supplies.
Meanwhile, Iran which has been living with Western sanctions for years - and has a lot to teach Russia on how to do that - is sitting pretty. According to Platts Analytics, Iranian oil exports rose to 850,000 bpd in June from a 2022 low of 650,000 bpd in May, but the real figures can even be higher.
For years, the West has used economic sanctions as a weapon against adversaries, but the policy appears to be backfiring and finally hitting its own architects.