Azernews.Az

Akbar Novruz

Read more

The escalating conflict involving Iran and the broader regional tensions are beginning to reshape global energy dynamics, potentially benefiting Russia economically despite Western sanctions imposed after the Russian invasion of Ukraine, AzerNEWS reports via Financial Times.

According to a report by the International Energy Agency (IEA), Russian crude and oil product exports fell by 11.4 percent in February to 6.6 million barrels per day, marking their lowest level since the 2022 invasion of Ukraine. However, rising global oil prices driven by instability in the Middle East are helping offset the impact of reduced export volumes.

Experts say the ongoing war is creating a favorable environment for Moscow. Borys Dodonov, head of energy and climate studies at the Kyiv School of Economics, noted that higher prices could support Russia’s fiscal stability in the short term.

“Much now depends on how long the Middle East conflict will last, but the current high prices will help Russia meet budget indicators this quarter and even start saving some money,” Dodonov said.

Analysts also believe the conflict could allow Russia to expand its role in global energy markets if supply disruptions affect exporters in the Persian Gulf. The Financial Times reported that Moscow may attempt to take advantage of the situation as Gulf producers face potential export constraints due to regional instability.

Russian President Vladimir Putin recently suggested that energy markets are entering “a new pricing reality” and even raised the possibility of resuming energy exports to Europe.

Shortly after, the Kremlin announced what it described as a “very productive conversation” between Putin and Donald Trump. Trump later hinted that sanctions on some countries could potentially be eased to stabilize energy prices “until this straightens out.”

These developments have caused concern among Western allies. Analysts warn that prolonged disruptions to Middle Eastern energy supplies could pressure European governments to reconsider their planned restrictions on Russian liquefied natural gas, potentially undermining years of efforts to isolate Moscow economically.

Market data also suggests Russian exports may be shifting toward Asia. According to shipping analytics firm Kpler, a substantial amount of Russian crude cargoes is currently at sea, many heading across the Indian Ocean toward India.

Indian imports of Russian oil were running at around 1.5 million barrels per day, representing a sharp increase from early last month.

“If the current shipment schedules, market intelligence and cargo movements continue, total Russian crude arrivals for the full month could reach close to 2 million barrels per day,” said Sumit Ritolia, a lead analyst at Kpler in New Delhi.

Ritolia summarized the broader market impact succinctly:

“Russia is the big winner of this conflict.”