Russia earns $150 mln a day as Iran war fuels chaos in key oil shipping strait
Photo: Vladimir Putin (Getty Images)
The closure of the Strait of Hormuz and the surge in oil prices are bringing Russia's budget up to $150 million in additional revenue per day, according to the Financial Times.
As the Middle East is engulfed in conflict, the Kremlin has unexpectedly emerged as one of the main economic beneficiaries of the crisis.
Indeed, the closure of the Strait of Hormuz and the sharp rise in global oil prices are generating up to $150 million in additional daily revenue for Russia's budget. This allows Moscow to cover fiscal gaps and prepare for a "new pricing reality," reportedly with Washington's tacit approval.
Billions in windfall profits within days
In just the first 12 days of the war between the United States, Israel, and Iran, Russia's treasury received an additional $1.3–1.9 billion. According to Financial Times estimates, this figure could reach $5 billion by the end of March.
The reason behind this is simple: disrupted supplies from the Persian Gulf have forced the world’s largest consumers to seek alternative sources.
Price reversal: Urals crude, which cost about $52 in February, has surged to $70–80 per barrel.
Discounts disappearing: In India, Russian crude is now being sold at a premium to Brent, whereas Moscow previously had to offer steep discounts.
In addition, the US administration has decided to ease sanctions pressure on Russia in order to contain rising gasoline prices in the United States. This has effectively allowed tankers carrying Russian oil to supply crude freely to markets in the Indian Ocean.
China and India are rapidly increasing purchases: India’s imports have risen by 50%, while China's have grown by 22%.
Russian president Vladimir Putin has already begun speaking about the possible resumption of energy exports to Europe, putting pressure on Brussels amid LNG shortages and the potential postponement of an embargo on Russian gas.
At the same time, Moscow is preparing additional capacity to produce 400,000 extra barrels per day, seeking to take full advantage of the Middle East energy crisis.
Chance for the Kremlin to return to Europe?
Seizing the moment, Vladimir Putin has already raised the prospect of restoring energy exports to Europe.
European governments are facing growing pressure. Due to shortages of liquefied natural gas (LNG) from Qatar, Brussels may have to postpone its planned embargo on Russian gas to avoid an energy shock.
Can Russia sustain this 'gold mine'?
Much will depend on the duration of the war involving Iran.
Moscow is already preparing to reactivate idle production capacity to pump an additional 400,000 barrels per day, hoping to capitalize on the crisis for as long as possible.
Situation in the oil market
Oil prices surpassed $100 per barrel immediately after large-scale fighting began in the Middle East.
Amid the sharp surge in fuel prices, the administration of US President Donald Trump has begun preparing radical steps to stabilize the domestic US market.
Meanwhile, Iran has threatened to unleash an "oil inferno" in the Middle East in response to US attacks.
