Escalating tensions in the Middle East, particularly disruptions to shipping through the Strait of Hormuz, are creating a significant economic benefit for Russia, bolstering its ability to finance its ongoing war in Ukraine. As global oil prices surge due to supply concerns, Moscow is poised to capitalize on increased revenue from its energy exports, despite facing extensive Western sanctions.
The interruption of tanker traffic through the Strait of Hormuz – a critical chokepoint for global oil supply – has already pushed crude oil prices higher. Brent crude is currently trading above $90 per barrel, while Russian Urals crude has risen to $72 a barrel, a substantial increase from $40 in December of last year, according to reports. This price increase directly translates to increased revenue for the Russian government, which relies heavily on oil and gas tax revenues to fund its military operations.
Oil Revenue and the War in Ukraine
Approximately 30 percent of the Russian federal budget is derived from oil and gas tax revenues, with 40 percent of that budget allocated to military and security spending, according to figures released by the Russian government. Simone Tagliapietra, an energy expert at the Bruegel think tank, stated that “Russia is a big winner from the war-related energy turmoil,” explaining that “higher oil prices mean higher revenues for the government and therefore stronger capability to finance the war in Ukraine.”
Russian President Vladimir Putin acknowledged the rising oil prices, attributing them to both “aggression against Iran” and Western restrictions on Russian oil. Speaking on Russian television, Putin promoted Russia as a reliable energy supplier and even suggested halting gas supplies to Europe, stating, “Russia has always been and remains a reliable supplier of energy resources for all our partners… Maybe it would be more beneficial for us to halt [gas] supplies now to the European market and abandon.”
Strait of Hormuz Closure: A Key Factor
The extent of Russia’s economic benefit will largely depend on the duration of disruptions in the Strait of Hormuz. Alexandra Prokopenko, an expert on the Russian economy at the Carnegie Russia Eurasia Center, noted that “a short-lived spike would not fundamentally change [Russia’s fortunes].” Still, a prolonged closure could significantly increase Russia’s windfall profits. According to the Carnegie Russia Eurasia Center, an extended closure could drive oil prices to $108 per barrel, representing the “largest windfall to Russia.”
In response to the escalating situation, U.S. President Donald Trump announced that the U.S. Navy would begin escorting oil and gas tankers through the Strait of Hormuz to counter rising energy prices. This move came after warnings from Islamic Revolutionary Guard Corps General Sardar Jabbari, who threatened to “burn any ship that tries to pass through the Strait of Hormuz.” Continued attacks on refineries and pipelines, such as the Ras Tanura refinery owned by Saudi Aramco, could further exacerbate inflation and potentially lead the European Union to reconsider its plans to ban Russian supply contracts, channeling more revenue into Moscow’s war efforts.
EU Sanctions and Russia’s Shifting Markets
The European Union is preparing to adopt its 20th package of sanctions targeting Russian oil exports, aiming to constrain Moscow’s ability to fund its military campaign. However, Russia has been actively seeking alternative markets, and Putin indicated a willingness to redirect supplies to customers willing to pay higher prices. “Customers have emerged who are willing to buy the same natural gas at higher prices, in this case due to events in the Middle East, the closure of the Strait of Hormuz, and so on,” Putin stated, adding that this was simply “business” and not driven by political motives.
Russia previously supplied approximately 40 percent of the European Union’s pipeline gas, but this figure has been reduced to just 6 percent in 2025, according to EU data. The EU plans to completely phase out Russian gas imports by late 2027, beginning with an complete to new short-term LNG contracts on April 25 of this year.
The current geopolitical landscape presents a complex situation, where escalating conflicts in the Middle East inadvertently benefit Russia’s economic position and its capacity to sustain military operations. The duration of disruptions to global energy supplies will be a critical factor in determining the extent of this benefit, and the international community continues to grapple with the implications of these interconnected crises.
What comes next will depend on the resolution of tensions in the Middle East and the effectiveness of international efforts to stabilize global energy markets. Continued monitoring of oil prices, shipping routes, and geopolitical developments will be crucial in assessing the long-term impact on Russia’s economy and the ongoing conflict in Ukraine.
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