Since the war in the Middle East began, the oil price has risen sharply, giving the Russian state treasury an extra $150 million per day. This week, crude oil surged dramatically to almost $120 a barrel, and oil prices remain well above the $59 mark. The recent jump in global oil prices provides a much-needed boost to Russian government revenues and will help Russia continue funding its war on Ukraine. The US has introduced a temporary easing of oil sanctions against Russia, with President Donald Trump suggesting that the US will waive oil-related sanctions on some countries to ease the shortage caused by the Iran war. If oil sanctions are eased on Russia, Moscow can look forward to an even greater financial windfall, though Ukraine's President Volodymyr Zelensky said that would be a serious blow for Kyiv and urged Trump against it. Whether the US will actually waive oil sanctions on Russia, and if so, to what extent, remains uncertain.
A shortage of fertilizer that will worsen the longer the war continues has emerged as another economic boon for Russia. A large part of the world's fertilizer is transported in peacetime through the narrow Strait of Hormuz, but by disrupting traffic in the strait and threatening to set fire to ships passing through it, Iran has an effective weapon against its enemies. Transport through the strait has decreased drastically, affecting around 30 percent of the world's fertilizer exported through the shipping lane. Russia is a major producer of fertilizer, and its exports are not dependent on the Strait of Hormuz. The sharp price increase in fertilizer since the war began, over 40 percent, provides a welcome contribution to the war chest in times when the country is subject to sanctions. How much Russia's fertilizer exports can compensate for the disruption in the Strait of Hormuz is unclear, but the world's poor countries are strongly dependent on fertilizer from the countries around the Persian Gulf.
Russia is well positioned for the expected and coming era of extreme shortage.
Russia hopes that demand for fertilizer will break the political isolation it has been in since the beginning of the war of aggression against Ukraine. In the EU, Russia-friendly Hungary has advocated for the Kremlin's cause and pleaded for relief in restrictions on imports of fertilizer from Russia. Russia also sees opportunities to tie itself to other markets. Russian President Vladimir Putin is styling himself as international peacemaker, and for Russia it's a chance to boost its profile in the Gulf and the Middle East - and to present itself as a power with influence. Whether Russia's increased economic power from the Iran war will translate into significant political influence, such as in the UN, is yet to be seen.
Diplomatically, the Kremlin is now calling for a swift de-escalation and political resolution of the Iran conflict. Moscow has a Comprehensive Strategic Partnership agreement with Iran, and this week Putin reaffirmed the Kremlin's unwavering support for Tehran, though their strategic partnership falls far short of a mutual defence treaty. In Monday's telephone conversation with US President Donald Trump, according to the Kremlin, Putin expressed several thoughts aimed at a swift diplomatic resolution of the Iran conflict, based among other things on contacts with leaders of Gulf states, the president of Iran, and leaders of other countries. The specific details of Putin's proposed diplomatic resolution for the Iran conflict mentioned in the call with Trump have not been disclosed.
[Putin] wants to be helpful.
Russia is carefully handling relations with the Trump administration, as the Kremlin is keen to retain good working relations with Trump. It views its ties with the Trump administration as beneficial to Moscow's war aims in Ukraine, and Putin has been careful not to criticise Trump personally and publicly over the Iran war. At a press conference, Trump said of Putin that he wants to be helpful, adding that he told Putin he could be more helpful by getting the Ukraine-Russia war over with.
Overall, Russia is benefiting from the war in Iran, with Kirill Dmitriev, Putin's envoy for economic cooperation, stating on social media that Russia is well positioned for the expected and coming era of extreme shortage. This economic windfall comes as Russia is continuing its war of attrition against Ukraine. How long the disruptions in the Strait of Hormuz will last and their full impact on global food prices are among the uncertainties, but the conflict has provided Moscow with a strategic advantage in both economic and political arenas.
I said, 'You could be more helpful by getting the Ukraine-Russia war over with. That would be more helpful.'