Russia is emerging as one of the biggest beneficiaries of the Middle East conflict between the US - Israel and Iran, as sharply rising oil prices and the temporary easing of some sanctions help increase Russia's crude oil export value and volume, analysts said.
The conflict in the Middle East shook the global energy market, pushing oil prices to skyrocket due to concerns that supply could be disrupted in the Strait of Hormuz, one of the world's most important energy transportation corridors.
Russia may benefit greatly from rising oil prices, especially as the US has eased restrictions on Russia's crude oil sales to India," said Saul Kavonic, Head of Energy Research at MST Marquee.
Oil prices exceeded $100 a barrel on March 9 as traders assessed the risk of a Gulf conflict that could disrupt shipments across the Strait of Hormuz.
Although oil prices fell by about 7% on March 10 after US President Donald Trump signaled that the conflict with Iran could end soon, the current price is still about 27% higher than before the conflict in Iran broke out.
For Russia, one of the world's largest oil exporters, despite facing many Western sanctions after the conflict in Ukraine broke out, this oil price increase means stronger state budget revenue.
Mr. Henning Gloystein - Managing Director in charge of energy and resources at Eurasia Group - said that Russia "has benefited greatly" from the crisis after the US allowed India to temporarily continue purchasing Russian oil.
The shipments are being sold around 90 USD/barrel, a sharp increase in both price and volume compared to about 50 USD/barrel before the Iranian conflict broke out," he said.
Analysts believe that higher oil prices combined with eased sanctions help more Russian oil barrels continue to circulate in the market, bringing an immediate financial boost to Russia.
Ms. Muyu Xu - senior analyst at Kpler - said that India's return to buying oil helps Russia's oil prices rise, while releasing stockpiles on offshore oil tankers.
Kpler data shows that the amount of Russian oil stored on oil tankers from 132.9 million barrels at the end of February has decreased to 118.3 million barrels this week, showing that shipments are being quickly delivered to buyers.
If the crisis continues to reduce oil exports from the Gulf region, Russia's profits could be even greater. According to Mr. Gloystein's estimates, Russia could earn tens of billions of USD in additional budget revenue if oil and gas prices remain high.
In addition to providing temporary immunity for India, the US is also considering easing oil sanctions against Russia.
Meanwhile, Russia's advantage may not only be limited to crude oil. Mr. Gloystein believes that Europe may increase imports of Russian liquefied natural gas (LNG), because LNG trips have not yet been sanctioned by the European Union.
Short-term benefits may be significant because Russia is both enjoying higher prices and having some easing in implementing sanctions. But growth potential is still limited," said Carole Nakhle, founder of Crystol Energy.
