Russia is reaping temporary economic gains from surging global energy prices following disruptions in the Strait of Hormuz, as supply shocks tied to U.S.-Israeli attacks on Iran and Tehran’s retaliation drive up oil, LNG and agricultural costs.
Supply disruptions in oil, liquefied natural gas (LNG), and agricultural products continue to drive up prices, while Russia, a major energy exporter, is among the countries that benefit in the short-term.
The global oil supply is bleeding 10 million barrels per day due to the crisis that began on Feb. 28, while the price of Brent crude oil rose over $100, reaching as high as $120 per barrel, according to the International Energy Agency.
Certain mining and agricultural commodities rallied on rising prices, alongside energy prices.
Rising prices had a positive impact on Russia’s revenues after having suffered under sanctions.
The U.S. decided to ease oil sanctions against Russia after the price shock, which prompted countries like India to rapidly buy Russian oil.
Russia’s oil, gas, and coal revenue climbed to €7.7 billion ($8.9 billion) in the first two weeks after the war broke out, according to the Center for Research on Energy and Clean Air.
Russia is estimated to have seen its daily revenues rise around 14% to approximately $462.3 million, providing some relief for its budget.
Demand for Russian oil surged in this period, with Asian countries turning to Russian oil amid tightening Gulf supply, the region’s vital waterway effectively closed, and maritime trade paralyzed.
Indian refineries are estimated to have bought around 30 million barrels in a short period.
The price of Russia’s Ural crude oil surged 80% versus the start of the year, reaching $90 per barrel, thus exceeding Brent crude for the first time since the start of the war in Ukraine in 2022.
Moscow is reportedly among those benefiting from the crisis with the Russian oil price, which has historically been sold at a discount due to sanctions, rapidly rebounded amid the global supply shortage, starting to bolster budget revenues, Russian media reported.
Experts say that Russia may struggle to fully take advantage of this strategic gain, as drone strikes on its energy infrastructure facilities by Ukraine and high logistical costs due to a shortage of tankers are the biggest hurdles hindering the rise in Russian exports.
While there are some constraints on the production side, Russia primarily lacks tech and investment in its energy sector due to sanctions, making it difficult to create new production capacity.
Corporate balance sheets suffer from rising costs in the country, with firms like Russia’s largest aluminum firm Rusal reporting losses due to a production decline, pointing to the fact that the country’s capacity to rapidly grow supply in most commodity sectors remains limited.
These recent developments in revenues provided some temporary relief for the country’s budget, however, the supply gap in global markets cannot be filled without resolving issues in production capacity and infrastructure.
The Russian Finance Ministry said it is reviewing budget policies and remaining cautious amid rising revenues.
Russian President Vladimir Putin recently said the rise in commodity prices is temporary and Moscow and firms should be able to maximize the benefits they can derive from this situation.
Kirill Dmitriev, Russia’s special presidential envoy on foreign investment and economic cooperation, said the country is one of the world’s largest producers of most commodities, and that it is well-prepared for the supposed upcoming period of "extreme scarcity.”
Russia is also a major agricultural producer with frequent export restrictions in the sector to limit price hikes in the domestic market.
The Russian Agriculture Ministry announced a temporary suspension on ammonium nitrate fertilizer exports until April 21, fueling concerns in the global food sector during supply issues.
Sergey Pigarev, senior equity research analyst at a digital retail broker Freedom Finance Global, told Anadolu that the US, as the world’s largest oil and gas producer, would be the country to benefit the most from this situation, while Russia, the world’s third-largest oil producer, would also benefit.
Pigarev stated that the suspension of sanctions on Russian oil will allow for the sale of massive stockpiles of oil accumulated on Russian tankers, while the U.S. side, as the world’s largest liquefied natural gas supplier, is benefiting from rising gas prices across Europe and Asia.
The U.S. Energy Department expects LNG export volumes from the U.S. to surge 10.4% in 2026 and 8.6% in 2027.
Pigarev mentioned that the Strait of Hormuz could be reopened in the first half of April, with the resumption of supply leading energy and fertilizer prices to bounce back to normal, but the world lacks enough spare capacity to compensate for the loss of energy and fertilizer supply from Gulf countries.
He said that Iran could become a major natural gas exporter if sanctions against the country were lifted and if the country’s government changed.
He added that Iran has the largest natural gas reserves only second to Russia, and theoretically, it could export more LNG than Qatar.
