As the world watches the unfolding events in the region in the growing conflict between Iran and the US, one nation is reaping the rewards of the growing conflict. Experts say that the growing conflict between Iran and the US has an unintended side effect that is breathing new life into Russia’s oil industry and could put Russia in a more powerful position in the world.
From rising oil prices to new international trade patterns, the conflict is opening doors that Russia is eager to step through.
Oil Prices Surge—and Russia Benefits
One of the most immediate effects of the war is the sharp rise in oil prices across the world, driven by concerns about supplies in the Middle East, especially around the region of the vital Strait of Hormuz.
The prices of Brent crude oil have risen to levels above $80 per barrel, and the prices of various oil blends in Russia, including the Urals, have also risen to levels far above what is needed to finance the Kremlin.
The rise in oil prices is manna from heaven for Russia, whose economy is highly dependent on oil exports. “A spike in global oil prices would come to the rescue,” commented an analyst, “as they will flow directly into the Kremlin’s war chest.”
The rise in oil prices is especially well-timed, as the imposition of Western sanctions had already caused a sharp fall in oil prices in Russia.
Iranian Supply Disruptions Open the Door
Another important factor in this case is the impact that the conflict has had on Iran’s export supplies. This means that since Iran is unable to export due to the conflict in the region, the world will need alternative supplies of oil, and this alternative will be heavy crude oil.
And that is where Russia will come in.
It should be noted that Russia is also a supplier of heavy crude oil. This is also a kind of oil that has been recognized to be the kind of oil that can be processed by most refineries in the world. This is because most refineries in the world have been designed to process heavy crude oil.
This means that since Iran will be out of commission due to the conflict in the region, Russia will be the alternative source of oil. “Russian oil will be sought after,” said one analyst. “Refineries will not be able to adjust to different types of crude.”
Sanctions Pressures
In the past, economic sanctions imposed by the U.S. and its allies on Russia had made it difficult for Russia to sell its oil. Russia had to give large discounts and rely on its “shadow fleet” to sell its oil.
The Iran conflict has now changed this situation somewhat.
As the world is experiencing a decrease in oil supplies and rising prices, some nations have started to secretly increase their oil imports from Russia. This is despite their political differences. In some cases, they have even started to pay premiums for oil that was previously stranded at sea.
“Cargoes that struggled to find buyers are now being snapped up,” one report said. This new interest in Russia’s oil is lessening the impact of economic sanctions against Russia and is helping Russia economically.
A Strategic Distraction From Ukraine
Outside of the energy arena, this Iran war is also redefining the geopolitics of the world in favor of Russia.
As the United States shifts its military focus to the Middle East due to the Iran war, Russia stands to benefit from the reduced international pressure on its Ukraine conflict.
“Trump’s Iran war could not have come at a better time for the Kremlin. The less Ukraine receives in terms of international attention, the better for Russia.”
This could be a second wind for Russia in its conflict with Ukraine.
Moscow’s Calculated Restraint
Yet despite its close relationship with Iran, Russia has taken a cautious approach to the conflict. Although Russia has denounced the U.S. and Israeli attacks and has supported Iran, it has not taken any military actions.
Instead, Russia has positioned itself as a possible mediator. As one report has noted, Russia’s cautious approach to the conflict has not been an accident. “Russia has responded with words of indignation—but no action.
Russia seems to be focused on the long-term benefits of its relationship with Iran.” Russia’s not taking any military actions in the conflict allows it to avoid any further risks while gaining the benefits.
Energy Leverage Returns to the Kremlin
The new demand for Russian oil is not only for making profits; it is also for gaining a vital geopolitical tool.
Energy exports have been one of Russia’s most important tools. Russia has been able to influence the energy supplies of the world and has been able to put pressure on other countries.
Now that oil is in demand again, Russia is gaining its leverage. “We should secure benefits for ourselves where possible, no matter how cynical that may sound,” said a spokesperson for the Kremlin. This is a pragmatic approach to the crisis.
This is because Russia is not only viewing this crisis as a crisis but also as an opportunity.
Courtesy Of Victoria Pickering ( Flickr CC0)Not Without Risks
Yet, in spite of all these advantages, experts point out that there are some downsides to the situation for Moscow.
The war has had an unpredictable impact on the world market, and in the future, it can lead to instability in the world economy, which will have a negative impact on energy exporters.
In addition to that, there are geopolitical risks. Russia’s failure to support Iran militarily will lead to a loss of its reputation as a loyal ally. The pressure from the West can lead to new sanctions being imposed. However, for now, the scales are in favor of the Kremlin.
A Shifting Global Order
The Iran war is not only reconfiguring the energy world; it is also reconfiguring the balance of power. With the United States distracted by the Middle East, Europe in chaos, and the flow of oil around the world in a state of flux, the situation is presenting Russia with opportunities to reassert its power.
The war is good for Russia’s Vladimir Putin, whose country is benefiting from a unique combination of economic and strategic advantages, as was made apparent by the geopolitical expert’s comment on the situation, “This situation is a blow to some—but a gain for others.”
The war may be a tragedy of enormous proportions, but it is also reconfiguring the world of energy, and the world of energy revolves around the flow of oil.
By William Hernandez
Journalist for Vlixx Magazine, reporting on news from around the world, ensuring timely, accurate, and detailed information to keep the public informed and educated.
Sources:
Fortune: Putin is the real winner in Trump’s Iran war as it puts Russian oil back on the map
BBC: Russia, China and the US – the global winners and losers of the Iran war
Featured and Inset Image Courtesy of Bamdad Norouzian Flickr Page – Creative Commons License
Inset Image Courtesy of Victoria Pickering Flickr Page- Creative Commons License
