Expert analysis: How Iran’s chaos could affect Russia and global oil prices
Illustrative photo: Russia’s position in the oil market may ease (Getty Images)
The surge in oil prices amid the events surrounding Iran has sparked talks about potential windfall profits for Russia. However, the actual situation for the Kremlin may be far more restrained.
RBC-Ukraine spoke with financial analyst Andriш Shevchyshyn to find out whether Moscow can truly profit from the current oil fluctuations.
Key points
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Russia is getting only a brief respite, not a sharp rise in revenue.
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The global discount on Russian oil remains at $25–30 per barrel.
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China may buy more Russian oil, but Russia might have to lower prices even further.
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Moscow may not be able to take full advantage of the situation.
Will Russia profit from the oil price rise?
According to the expert, higher prices do provide some relief for Russia. However, the key issue is that even with rising global quotations, Russian oil is sold at a significantly lower price.
"This does give some breathing room, of course, thanks to the price increase. But the global discount is still $25–30. So even with the current rise to $78, the discount will be $30, meaning it will be sold for around $48," Shevchyshyn explained in a comment to RBC-Ukraine.
Read also: Hormuz blockade could halt oil production in 25 days, JPMorgan warns
China factor
However, much depends on China, which has become the main destination for a significant portion of Russian exports.
The expert noted, "China is already well-stocked, so now it will be filling the gap. It won’t be able to buy from Iran, so it will take more from Russia."
At the same time, he emphasizes that in the oil market, not only price matters but also market share.
Russia may further undercut prices
According to the analyst, Moscow could offer additional discounts to secure its position in China.
He explained, "For them, this is a breather, an extra niche, and an opportunity to cooperate with China," Shevchyshyn said.
Market is currently unpredictable
Shevchyshyn emphasizes that traders are cautious and are not rushing to buy oil at inflated prices.
"Imagine you’re an oil trader. You want to make a profit, so you aim to sell at a higher price. I have three weeks’ worth of stock. Why would I buy from you at $100?" the expert summarizes.
Thus, the situation could change rapidly.
How long will the benefit last for Russia?
The expert points out that the key question is the duration of the fighting in Iran.
"If this is a short-term situation, Russia simply won’t have time to take full advantage of it," the expert believes.
What is happening around Iran and the Strait of Hormuz
Photo: location of the Strait of Hormuz (screenshot from Google Maps)
Although the UAE and Saudi Arabia are trying to pump oil around the region via pipelines, it is not enough.
As a result, fuel prices have surged sharply. India and Iran have already raised prices on their oil.
According to preliminary forecasts, amid the blockade of oil transport through the Strait of Hormuz, oil prices could reach $100 per barrel — and that may not be the limit.
