How a Lengthy Israel-Iran Conflict Could Provide Russia with Economic Gains

Oil prices are experiencing significant fluctuations due to the escalation of tensions between Israel and Iran, which threatens to extend the conflict to a broader regional level.

This instability is advantageous for Russia, although the actual financial benefits are contingent upon the duration and severity of the conflict.

Moscow stands to gain the most from a drawn-out confrontation that creates uncertainty around energy supplies without escalating into a full-scale war.

Here’s an analysis of how the Israel-Iran conflict might influence Russia’s economic interests:

On Sunday, Iran’s parliament approved a plan to close the Strait of Hormuz, a crucial energy passage relied upon by Iran, Saudi Arabia, Iraq, Kuwait, Qatar, and the UAE for exporting about one-third of global seaborne oil and gas.

Following this announcement, Brent crude futures surged to $81.40 per barrel on Monday. However, Donald Trump’s announcement of a ceasefire between Iran and Israel caused the price to drop sharply to $67.30 per barrel.

This marks a slight increase from the $66.60 per barrel recorded on June 11, before the situation escalated into active conflict.

The regional situation remains unstable even after Trump’s announcement, as Iran and Israel have not yet established an official ceasefire agreement. Reports indicate that hostilities continued, with both sides exchanging strikes as recently as early Tuesday.

Goldman Sachs projected on Monday that Brent crude prices could briefly reach $110 per barrel if oil shipments through the Strait of Hormuz were cut in half for a month.

The bank anticipates an average price of $95 per barrel for the fourth quarter of 2025 in the event of disruptions, a significant increase from its earlier forecast of an average of $78 per barrel for the whole year.

The primary risk in a potential war between Iran and Israel lies in the possible disruption of regional energy exports, especially through the Strait of Hormuz, where Iran could impede shipping operations.

Approximately 14 million barrels of oil per day, amounting to nearly 20% of global oil flow, pass through the strait, including Iran’s exports.

Some countries possess alternative routes; for instance, Saudi Arabia can use the East-West pipeline to transport oil to its Red Sea ports, while Iraq can send its oil via pipelines in Kurdistan.

However, a significant volume of oil and liquefied natural gas would be stranded without access to the strait.

“Most of the oil that transits through the strait lacks alternative exit routes from the region, though some pipeline options could bypass it,” stated the U.S. Energy Information Administration (EIA).

Russia could take advantage of this crisis in two key ways.

First, potential oil supply shortages might lead to tighter market conditions, pushing prices higher globally. This would allow Russian oil to be sold at a premium, and Western nations are likely to delay implementing further sanctions on Russian energy until the situation stabilizes.

Second, Russia stands to gain more directly by filling in for the Middle Eastern oil and gas that China imports.

The EIA reported that in 2024, 84% of the crude oil, condensate, and liquefied natural gas that flowed through the Strait of Hormuz went to Asian markets, primarily to China, India, Japan, and South Korea.

Customs data from China indicated that in May 2025, Russia was the largest exporter of crude oil and condensate to China, delivering $3.88 million worth. Saudi Arabia followed with $2.84 million, and Iraq with $2.69 million.

The extent of Russia’s benefits from the Middle East conflict will hinge upon its timing and intensity.

Analyst Alyona Nikolayeva believes that Russia would gain the most from a prolonged, low-intensity conflict. This scenario would maintain uncertainties surrounding the energy supply without causing significant shocks to the global economy that might reduce demand for oil and gas.

Moderate disruptions to supply channels in the Middle East could elevate the price of Russia’s Urals blend to $75, Nikolayeva noted. This would significantly narrow the price gap between Urals and the global benchmark Brent, reducing the Urals discount to just $2.

For reference, Urals was priced at $52 per barrel in May, with a Brent discount of about $6.

Analyst Pavel Ryabov commented that while a closure of the Strait of Hormuz seems unlikely, the conflict between Iran and Israel could persist for a while.

“I believe the markets are misjudging the situation; we may be experiencing the calm before the storm, but there hasn’t been a sustained de-escalation yet,” Ryabov remarked regarding the market’s reaction to the recent ceasefire announcement.

An increase in Russian energy prices would greatly benefit Moscow’s federal budget and its reserves, especially since its oil and gas revenues have been diminishing due to sanctions and concerns over a potential global economic downturn that could lower the demand for these resources.

In May, Russia’s Finance Ministry reduced its energy revenue forecast for 2025 by 24%, anticipating a prolonged period of low prices.

Russia exports about 4.7 million barrels of crude oil per day. A $20 increase in the price of Russian oil would add approximately $2.8 billion to its monthly revenue.

If high prices persist for the next six months, Russia could generate an additional $16.8 billion in export income. While this wouldn’t dramatically change the economic landscape, it could help mitigate the anticipated deficit for the year.

For perspective, last year’s deficit was around 3.2 trillion rubles, or about $41 billion.