Crude oil prices surged above $90 per barrel on Friday, marking the steepest weekly gain since the onset of the war in Ukraine, as the escalating conflict in Iran disrupted global energy supplies and stoked fears of wider regional instability. The price of Brent crude reached $91.78 per barrel, while U.S. West Texas Intermediate (WTI) climbed to $90.84, according to market data.
The Kremlin has stated that the war in Iran has fueled a significant increase in demand for Russian energy, providing a boost to exports that have been hampered by sanctions related to the ongoing conflict in Ukraine. According to the Kremlin, this increased demand is a direct consequence of disruptions to oil tanker traffic through the Strait of Hormuz, a critical waterway for global oil transportation, handling approximately 20% of the world’s oil consumption.
Oil prices for Russian exports have risen sharply, from under $40 per barrel in December to around $62 per barrel, initially driven by anxieties surrounding the conflict and subsequently by the disruption of tanker routes. While still trading at a discount compared to the international benchmark Brent crude, which closed at $72.87 on the eve of the attack on Iran and has since risen above $82, Russian crude is now exceeding the $59 per barrel benchmark used in the Russian Finance Ministry’s 2026 budget plan.
Oil and gas tax revenues contribute up to 30% of the Russian federal budget, making the price increase particularly significant. This development comes after a period of declining revenue for Russia, with state oil and gas income falling to a four-year low of 393 billion rubles ($5 billion) in January, and a record budget shortfall of 1.7 trillion rubles ($21.8 billion) for the same month. The earlier revenue decline was attributed to weaker global prices and discounts imposed by Western sanctions and efforts to limit Russia’s “shadow fleet” of tankers.
Further exacerbating the situation, the cessation of liquefied natural gas (LNG) production by Qatar, a major supplier, is expected to intensify global competition for available cargoes, potentially benefiting Russian LNG exports. The disruption in Qatar’s production adds to the overall tightness in the global energy market, driving up prices and increasing the value of Russian energy exports.
The escalating conflict is also impacting diplomatic efforts to resolve the war in Ukraine. U.S. President Donald Trump has been urging Russia and Ukraine to negotiate a settlement, but a tentatively scheduled third round of talks involving Ukrainian, U.S., and Russian officials in Abu Dhabi appears unsettled by the heightened tensions in West Asia. President Zelenskyy had indicated the talks were planned for Thursday and Friday.
The situation is further complicated by a dispute over the Druzhba pipeline, which transports Russian oil to Europe, and a proposed air defense weapons swap involving Ukraine. The broader geopolitical implications of the Iran conflict are reshaping the dynamics of the Ukraine war, creating new challenges for diplomatic resolution and altering the strategic landscape.
