(Photo by the Kremlin via Wikimedia Commons/CC BY 4.0 DEED)
The United States (U.S.) and Israel’s war against Iran, now passing beyond one hundred days, has placed a continued strain upon global economies. The Strait of Hormuz – a vital shipping route between the oil-dense Gulf of Oman and global oceans – has been a hotbed of conflict since the war began.
Responsible for around a quarter of the world’s seaborne oil, Iran’s decision to close the strait in response to U.S. naval blockading has exposed the fragility of global energy supplies. And while many countries face soaring crude energy costs as a result, Russia stands to benefit.
An Energy Crisis
Following the closure of the Strait earlier this March, global energy markets have plunged into crisis. As supply cannot keep up with the demand for natural energy, the cost of oil and gas has risen sharply. A barrel of crude oil, for example, has seen its cost increase by 55% since the war in Iran began. Whereas a barrel of oil could be purchased for around $72 USD earlier in February, importers could now be paying closer to $100 for the same product.
(Map via Wikimedia Commons/Public Domain)
Natural resources like crude oil are vital to global economies. Crude oil and natural gas are fundamental to manufacturing and commerce, ranging from fertilizer production to transportation fuels. Large-scale economies, such as China and India, which relied heavily on the Strait’s oil supply for production, rapidly turned to alternative sources.
A Windfall for Russia
Russia, itself one of the largest producers of natural energy, has emerged to reap the rewards. A longtime exporter to Asian markets, the closure of the strait increased demand for Russian crude. In the first two weeks of the war alone, Russian energy exports generated $777 million in additional revenue.
This could not have come at a better time for Russia. Since the start of President Vladimir Putin’s invasion of Ukraine in 2022, Russia’s economy has faced severe global pressure. With over 20,000 sanctions in place from fifty countries isolating Russia from global commerce, alongside the long-term costs of war, Russia had been approaching economic stagnation throughout 2026.
But owing to the closure of the strait, Russia found its oil to have doubled in value almost overnight. The average cost of Russian Urals oil surged from $60 a barrel before the war in Iran to over $90. Additionally, the United States has eased its own imposed sanctions on Russian energy exports in an attempt to counteract the energy vacuum left by the strait’s closure. These factors have no doubt made Russia one of the biggest benefactors of the war in Iran.
Natural energies account for nearly 20% of Russia’s GDP. The windfall Russia is receiving from increased energy exports is allowing Putin’s government to recoup some of the damage done to its economy in recent years. Economic measures, such as planned budget tightening and cuts, have now been delayed by the Kremlin due to the war in Iran.
The Ripple Effects Undermining Ukrainian Security
Despite President Trump’s insistence that the conflict in Iran is nearing an alleged end, the war’s consequences are yet to be fully felt. U.S. intervention in Iran has indeed passed well beyond the Middle East, and will have no easy conclusion.
In a few crucial ways, the war in Iran has significantly affected Ukrainian security. On the one hand, the economic windfall Russia has received is providing additional revenue for Putin to direct into wartime operations. On the other hand, the conflict has shifted the Trump administration’s attention away from Ukraine’s defence.
The U.S. is one of Ukraine’s key military supporters. With the U.S. military engaged in the Middle East, weapons stockpiles are being used in Iran. As a result, Washington is less willing to send munitions and other key resources to Ukraine. Additionally, the financial burden of Trump’s war excuses any additional financial assistance to Ukraine, which is already a contentious topic within Washington.
(Photo by State Emergency Service of Ukraine via Wikimedia Commons/CC BY 4.0 DEED)
Indeed, the question of Ukraine is vital to European security. By invading Ukraine, Russia blatantly violated the UN Charter’s non-aggression articles that prohibit its members from using force against another’s territory. Confidence in national borders has no doubt been shaken as states prepare for potential conflict, marked by a general trend of increased defence spending across Europe since 2022.
The ongoing military action continues to threaten Ukrainian sovereignty and the daily lives of thousands of Ukrainians. Russia’s increased energy exports have afforded it the ability to continue supporting the war, and call into question the looming shadow of Russian imperialism in the region and beyond into Europe.
India’s Russian Oil Dilemma
The benefit to Russia’s economy, however, is not without its geopolitical consequences for importers. Asian markets, such as India, are caught in a political dilemma between ensuring a necessary flow of energy and Western pressure to distance themselves from Russian products.
India’s External Affairs Minister Subrahmanyam Jaishankar recently faced pressure over his government’s decision to purchase Russian oil, defending his government’s economic ties to Russia as a commitment to price and availability rather than ideology. Furthermore, Jaishankar criticized what he sees as a moral inconsistency in U.S. foreign policy, suggesting that it’s a mistake to believe “there’s some great principle” behind U.S. decisions to discourage the import of Russian crude.
(Photo by MSC/Schulze via Wikimedia Commons/CC BY-SA 4.0 DEED)
This reflects India’s wider role as an independent economy caught between political centres. Buying Russian oil is argued as a necessary measure to fuel its growing manufacturing and ensure energy security. However, their imports are conflated to mean that India is actively supporting Russia, and in doing so, undermine global efforts to isolate and starve Moscow’s economy by increasing its energy income.
The U.S., which had previously held heavy sanctions against India’s Russian imports in a bid to discourage its economic relations, now faces the likelihood that its efforts will be undermined twofold. India’s renewed reliance on Russian crude has brought its economic relationship back into focus and challenged the Washington-New Delhi relationship by exposing the limits of U.S. economic influence. This may lead to harsher punitive measures imposed on India as the U.S. attempts to promote its own economy.
Who Wins from Conflict?
As a backer and wartime supporter of Iran, Russia has effectively waged a proxy war against the U.S. and won a significant strategic economic advantage because of it. Those countries seeking to plug their energy gap with Russian crude strengthen Putin’s global position by renewing and developing economic ties. This is not to say that Russia’s domestic and international problems have been fixed, but that they surely have reaped the most benefit from the conflict in Iran.
And though it seems that the United States and Iran have agreed on a new peace deal – a deal threatened by Israel’s continued aggression in the region – to end the conflict and reopen the Strait, it is unlikely that the global effect of the war will be over anytime soon.
Even if ships begin movements of crude energy rapidly again, it is highly unlikely that shipping will return to normal operations for months at the very least until ship insurers are assured of safe passage. Indeed, it will likely take even longer for global energy supplies to stabilise and catch up with the deficit created by the Strait’s long closure.
Fundamentally, the United States’ attack on Iran has been a costly strategic failure. Of the original main objectives laid out by Washington, Iranian regime change and the crippling of Iran’s nuclear capability, neither has been achieved. Much, however, has been spent, damaged, and destroyed in the vain attempt to do so.
An Unjust Conquest
Over 3,000 people have been killed in both Iran and Lebanon since the war began, with an additional 28 killed in the neighbouring Gulf states. U.S.-Israeli imperialism across the Middle East accounts for huge disruption to the livelihoods and agency of those communities now reckoning with the enormous physical, cultural, and social destruction exacted upon them. Once again, the United States has proven itself to be on the side of the forceful aggressor in the Middle East.
As more time progresses past the tentative peace deal, it will be anyone’s guess for how long the fallout of the war in Iran will be felt, exploited, and understood. If one thing is obvious, however, it’s that Trump’s attempts to spread U.S. influence have left distinct instability in the communities across Iran, Lebanon, and the Gulf States, as well as in global energy markets, with no obvious reward to justify his actions.
Whether indirectly or not, the lifeline the United States has inadvertently thrown to Putin has further destabilised global geopolitics and positioned Russia to benefit from its own failures.
Edited by Anonymous
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