The global energy market is currently experiencing unprecedented turmoil, but one individual appears to be benefiting from this upheaval: Vladimir Putin of Russia. According to Alexander Kolyandr from the Centre for European Policy Analysis, the ongoing conflict in Iran has turned into a profitable situation for the Russian president. Kolyandr stated, “Russia is likely the main, if not the sole beneficiary of the war against Iran.”
For over three years, Russia’s oil exports have been subjected to sanctions that enforced a price cap, restricting Moscow’s potential revenue from oil sales. These sanctions, implemented by the G7, the European Union, and Australia, aim to curtail the financial resources available to Russia for its military operations in Ukraine. However, last month, the situation shifted dramatically as oil prices surged in response to the conflict in Iran and the near-blockade of the Strait of Hormuz. In response, the United States opted to temporarily lift sanctions on Russian oil that had already been loaded onto export tankers.
U.S. Treasury Secretary Scott Bessent characterized this decision as a “short-term measure” designed to “promote stability in world energy markets.” Since this waiver was enacted on March 12, Russia’s oil export revenues have significantly increased. Kolyandr noted that “the primary financial gain for Russia stems from the U.S. Department of Defense, resulting from the elevated oil prices.”
When the Iran conflict began in late February, Brent crude oil was priced at approximately $60 per barrel. Despite a ceasefire agreement announced this week by the U.S. and Iran, prices remain around $100 per barrel. Kolyandr explained, “If oil prices rise by $10 per barrel for a month, it translates to an additional $1.6 billion for the Russian budget. Therefore, if prices are $40 higher, you can make your calculations accordingly.”
Former U.S. Treasury Department advisor Roxanna Vigil stated that the intent behind waiving sanctions was to lower oil prices by increasing supply, but this strategy has not yielded the desired results. “We can definitively say that instead of reducing prices, it has actually driven up the cost of Russian crude, to the extent that it now sells for more than the Brent crude benchmark,” Vigil remarked.
In addition to lifting sanctions on Russian oil, the U.S. also removed restrictions on Iranian oil already loaded onto tankers. Both waivers are set to expire soon, leaving U.S. President Donald Trump with a challenging decision regarding their potential extension. Vigil acknowledged the complexity of this decision, saying, “It will be difficult because it appears that Russia is currently gaining from this situation,” while also noting bipartisan criticism from Congress.
The lifting of sanctions has also affected Russia’s ability to transport oil to its clients, as Kolyandr pointed out. “The U.S. effectively freed several tankers that were previously stranded at sea, filled with oil or refined products. Now, with those tankers available, Russia can resume exports.” While the European Union maintains its sanctions on Russian oil, energy analyst Saul Kavonic highlighted that European nations have taken proactive measures at sea, boarding or seizing three Russian oil tankers since the conflict began.
Kavonic emphasized that Europe is increasingly aware that the war in Iran, along with the U.S. waivers, is enhancing the financial resources available to Putin for his military endeavors in Ukraine. In response, Ukraine has intensified its drone attacks on Russian oil infrastructure, targeting export terminals and refineries, which resulted in a significant drop in export capacity last month. Although Russia claims to have recovered much of this capacity, the interconnectedness of global energy markets remains evident.
