The US and Israel launched a war against Iran on 28 February, targeting Tehran’s military and naval forces, killing several of its top leaders, including the Supreme Leader Ayatollah Ali Khamenei. The conflict prompted Tehran to retaliate, with US military installations and Israel being targeted by drones and missiles, plunging the wider Gulf region into a deeper and wider military confrontation.
While many continue to speculate who could win the war, the United States or Iran, a CNBC The report suggests that Russia could emerge as the real winner from this war.
How can Moscow win from the US-Israel-Iran war?
The report, citing analysts, suggests that Moscow is set to emerge as a major beneficiary from the war, as higher oil prices and temporary sanctions relief strengthen the value and volume of its crude oil exports.
Russia stands to gain from higher oil prices, especially after the US eased restrictions on India’s purchase of Russian crude oil, Saul Kavonic, head of energy research at MST Marquee, told CNBC.
Moscow, which continues to be the world’s largest crude oil exporter despite sanctions after it launched a full-scale war on Ukraine in February 2022, will see the price rally translate to stronger state revenues.
How has India’s purchase of Russian crude helped Moscow?
Analysts believe that Moscow has “already hugely benefited” from the conflict after Washington granted New Delhi a temporary waiver to purchase Russian crude oil. US President Donald Trump, in February, said that India had agreed to halt the purchase of Russian crude oil as the two sides signed a Bilateral Trade Agreement (BTA).
Additionally, Russian cargoes have been sold at $90 per barrel, marking a large increase in prices and sales volumes, an analyst said, noting that before the Iran war, they were sold at $50 per barrel.
Renewed buying from India has helped Russia raise crude prices while clearing a backlog of cargoes that had gathered at sea. According to Kpler data, Russian crude held on tankers declined to 118.3 million barrels this week, down from 132.9 million barrels in February, suggesting cargoes are now reaching buyers faster.
Temporary sanctions relief to help Russia
Russia’s chances of emerging as a winner from the war are further aided by the temporary sanctions relief, which will allow more crude oil barrels to remain in circulation, thereby providing a short-term boost to the country’s finances.
According to a reuters report, Trump is mulling easing oil sanctions on Moscow and releasing emergency crude stockpiles as part of a package of options aimed at limiting the spike in global oil prices. The report suggests that these deliberations show the White House’s concerns about the surge in oil prices can also affect US businesses and consumers ahead of the November midterm elections, when Republicans hope to retain control of Congress.
Global energy markets rattled
Days after Iran’s Islamic Revolutionary Guards Corps (IRGC) closed the Strait of Hormuz, a key route responsible for roughly 20% of the world’s oil supply, oil prices jumped to $120 per barrel on Monday (local time). Hormuz’s closure and Iran’s continuing attacks on oil facilities across the Middle Eastern countries have rattled the global energy markets as fears of supply disruptions now loom.
While oil prices fell nearly 7% on Tuesday (local time) after US President Donald Trump said the war with Iran could end soon, they were still up 27% compared to when the conflict began in late February.
If the conflict in Iran continues to constrain Gulf exports, the advantage for Russia could be huge. An analyst predicts that Moscow could generate tens of billions of dollars in state revenue as oil and gas prices remain high.
