The Middle East situation causes oil prices to surge, with Russia earning an additional $150 million daily. Putin: Seize the opportunity to use the increased revenue to reduce debt.

The military strikes by the U.S. and Israel against Iran have entered the 21st day, and the situation in the Middle East continues to be unstable, with shipping in the Strait of Hormuz disrupted and global energy markets experiencing severe fluctuations.

It is reported that Russia is generating additional fiscal revenue of up to $150 million per day through oil sales, reaping significant profits from this conflict.

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After shipping in the Strait of Hormuz was disrupted, countries like India have increased their demand for Russian crude oil, and Russia has thus far gained approximately $1.3 billion to $1.9 billion in “unexpected revenue” from oil export taxes. Meanwhile, the U.S. has relaxed its sanctions on Russia and eased pressure on India to stop purchasing Russian oil, prompting a large number of oil tankers to shift to Indian Ocean routes.

According to industry data and estimates from multiple analysts, by the end of March, the Russian government may gain approximately $3.3 billion to $4.9 billion in additional fiscal revenue. This forecast is based on the average price of Russia’s Urals crude oil rising to $70 to $80 per barrel this month, rather than maintaining the previous two months’ average of about $52 per barrel.

Reports indicate that this marks a significant turnaround for Russia since the outbreak of the Russia-Ukraine conflict. Before the U.S.-Iran conflict erupted, Russia had been in a difficult position due to falling oil prices and a significant loss of exports to India under pressure from Washington. A report released by the International Energy Agency on March 12 showed that Russia’s crude oil and refined oil exports fell sharply by 11.4% in February to 6.6 million barrels per day, the lowest level since the Russia-Ukraine conflict began in 2022.

Boris, head of energy and climate research at the Kyiv School of Economics, stated that the current situation largely depends on the duration of the Middle East conflict, but the current high oil prices “will help Russia meet its budget targets for this quarter and even begin to achieve some level of fiscal surplus.”

Analysis points out that the U.S.-Iran conflict provides Russia with an opportunity to strengthen its influence in the global energy market, while Gulf countries that cannot export energy products normally are paying the price for it. European Council President Costa stated on March 11 that Russia is the “only winner” in this war.

In light of this, Russia is trying to seize the opportunities presented by the current market changes. According to CCTV News, Putin stated in Moscow on March 9 that he has instructed the Russian government to assess the feasibility of stopping energy supplies to the European market, considering redirecting these energies to more attractive markets.

Putin emphasized that against the backdrop of ongoing conflicts in the Middle East, global fuel and energy logistics will shift towards more profitable and promising markets. Russian energy companies need to seize the current opportunity and use the new revenue to reduce debt, “and the Russian government and central bank must monitor this process.”

Shipping tracking agency Kpler reports that a large amount of Russian crude oil is flowing to India. As of March 11, India’s import volume has reached 1.5 million barrels per day, an increase of about 50% from the beginning of last month; at the same time, offshore stockpiles have fallen to 125 million barrels, with exports noticeably accelerating. Industry insiders indicate that if the current shipping arrangements and cargo flow trends continue, the total volume of Russian crude oil arriving this month may approach 2 million barrels per day, further solidifying its position as the biggest beneficiary in this round of conflict.

In terms of pricing, Russian crude oil has risen by about $20 to $30 per barrel compared to the average level of the previous three months. Kpler analysis suggests that its price in India is now about $5 higher per barrel than Brent crude oil, reversing the previous discount situation.

Source: Upstream Finance Comprehensive CCTV News, Hongxing News

Editor: Chen Yu

Proofreader: Liu Yan

Reviewer: Hu Zhaoqin

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