Why Russia Won the Iran War | Money News

In a war increasingly determined by oil flows and prices, one country has emerged victorious – and it isn’t even the country at war.

When the US-Israel attack on Iran had a negative impact oil prices soared and raising questions about America’s appetite for prolonged price shocks, Russia has benefited from higher oil revenues.

The transformation of Russia’s fate, both literal and metaphorical, was dramatic. Two weeks ago, Vladimir Putin was under increasing pressure as sanctions tightened.

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Currently, with abundant crude oil supplies not limited by the closure of the Strait of Hormuz, Russia is taking advantage of this.

Not only have Urals crude prices soared, but the discounts Russia was forced to offer as a consequence of sanctions have been eliminated, providing a windfall for the Kremlin and its campaign against Ukraine.

Russian oil revenues fell 18% last year, according to the Center for Research & Clean Air (CREA), and appeared to decline further in January, putting real pressure on the Russian economy.

The attack on Iran has eased those pressures, with revenues increasing by 17% in the past two weeks and exports from northern Russian ports increasing by 24%.

This change in fortunes can be illustrated by the passing of one ship in the Russian shadow fleet.

In February, Sky News intercepted the Kousai, a Sierra Leone-flagged tanker, as it passed through the Strait of Dover.

With a capacity of about 750,000 barrels, the cargo was worth about $40 million when it was loaded with crude oil at Ust-Luga in the Baltic on February 2.

By the time it passed Dover, eight days later, it was worth potentially $42 million, as Urals crude was trading at $56 a barrel, $13 below Brent crude.

Nine days after the Iran war, Urals prices peaked at more than $100 a barrel, so that when the Kousai passed through Sri Lanka en route to India on March 9, its cargo was worth $75 million. On Thursday morning, as it approached Paradip, the price was back to $65 million, reflecting a barrel price of $87.

The events of the past two weeks have eased the pressure that has been building since Ukraine’s invasion to curb Russian oil revenues.

Sanctions from the UK, EU, Australia, Canada and the US have targeted thousands of Russian individuals and companies, as well as hundreds of tankers in the so-called “shadow fleet” relied on to transport crude around the world.

Revocation of sanctions

As Western countries closed for business, India and China became the biggest customers of Russian crude, but US sanctions on New Delhi imposed in February appear to have dealt a serious blow.

But last week, the US offered India a 30-day waiver of those restrictions, a tacit acknowledgment that, with 20% of global supply hampered by the closure of the Strait of Hormuz, Indian demand could further push up prices.

Russia has also benefited from supply disruptions to China, which gets nearly half its oil imports from Gulf countries, which are currently unable to send tankers through the Gulf.

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“The spike in energy prices triggered by the closure of the Strait of Hormuz boosted the Kremlin’s oil and gas revenues, helping fund its war chest. As a result, geopolitical turmoil and policy gaps provided Russia with a windfall as sanctions took effect,” said CREA’s Isaac Levy.

“The US waiver allowing India to continue buying Russian oil from sanctioned companies will lessen the impact of sanctions. Discounts on Russian crude have almost disappeared, and idle tankers are now preparing to unload again at Indian ports.”

The longer the Iranian conflict lasts, the greater the possible gains for Russia.