As the United States and Israel attack Iran and the global energy market reels, Russia is raking in massive economic gains behind the scenes.
At the start of this year, as the invasion of Ukraine entered its fourth year, there were signs that an economic crisis could erupt in Russia due to the astronomically swollen war expense. The Putin administration even considered whether to scale back its military operation in Ukraine.
But the situation flipped abruptly when U.S. President Trump struck Iran. To curb domestic inflation and stabilize the global energy market, the United States temporarily suspended sanctions on Russian oil starting on the 12th. Since then, massive oil money has begun pouring back into Russia's once-parched treasury.
Russia is pushing crude export volumes to the limit by exploiting the slackened sanctions. Ship-tracking data and port agent reports indicate Russian-flagged tankers are fully loading crude by making full use of the Strait of Hormuz closure and the U.S. tariff suspension. According to Bloomberg on the 18th local time, as of the 15th of this month, Russia's seaborne crude exports averaged 3.44 million Barrels per day over the past four weeks. In the second week of March, daily exports jumped to 3.97 million Barrels, hitting the highest level in about a year.
Routing through Arctic and Pacific ports, Russia is selling most of the unleashed crude to Asian countries such as India and China. This month, exports to Asian countries increased to 3.17 million Barrels per day. To thoroughly capitalize on the sanction suspension, Moscow is fixated on maximizing revenue, including creating additional export volumes by blending Kazakh crude, Bloomberg reported.
Oil and gas remain the key pillars propping up Russia's economy despite international sanctions. In this year's budget planning, Russia's Finance Ministry set a low benchmark price of $59 per Barrel for Urals, its main export grade. In reality, as international sanctions tightened further, Russia's revenue from the oil and gas institutional sector over January and February plunged 47% from a year earlier to $10.2 billion.
However, as the Iran war pushed up oil prices, the price of Russia's key crude grade delivered to India hit a record high. Ukraine President Volodymyr Zelensky cited Ukrainian intelligence analysis to claim that Russia earned $10 billion (about 15 trillion won) in just two weeks after the Middle East war broke out. Citing Luke Wikenden, a European analyst of Russian energy sanctions, CBS in the United States said, "The increase in oil revenue is becoming a new lifeline for Russia," adding, "The surge in oil prices has effectively neutralized the Western sanctions net."
Foreign policy experts said Russia is taking a thoroughly two-faced approach toward its ally Iran. On the first day of the U.S. and Israeli airstrikes, President Putin strongly condemned the United States after Iran's Supreme Leader Ali Khamenei was killed, calling it "a cynical murder that violates all human morals and norms of international law." It was diplomatic rhetoric aimed at highlighting an anti-U.S. front by shielding ally Iran.
At the same time, in the crude market, it launched sales promotions to increase its share of the energy market at home by exploiting the geopolitical crisis. Kremlin Spokesperson Dmitry Peskov emphasized at a press briefing on the first day of the strikes that "demand for Russian energy products has increased," adding, "Russia has reliably supplied both oil and gas and will continue to do so." U.S. political outlet Politico called this "a glimpse, without filter, of Moscow-style pragmatism that turns crisis into cash even in the face of the death of an allied leader."
This Iran crisis is also expected to significantly bolster a diplomatic strategy Russia has long pursued at the level of the global energy supply chain. While Middle Eastern countries face export disruptions due to the Strait of Hormuz crisis, Russia is cementing its foothold in the Asian market. As energy supplies from the Middle East grow unstable, major Asian importers such as China and India have little choice but to increase their dependence on Russian crude and liquefied natural gas. For Russia, it is an opportunity not only to generate short-term revenue but also to seize energy dominance in Asia.
The Diplomat, a foreign affairs magazine, citing energy consulting firm Stratas Advisors, said, "For major Asian importers, the Iran crisis is an immediate threat, but for Russia, it is an opportunity to secure a long-term role as a key hydrocarbons supplier."