“Just over a week ago, Russia's energy industry was in its worst shape in years, with low oil prices and sanctions starving the economy of cash. Millions of barrels of Russian oil floated on the sea, much of it without a destination.
The war in the Persian Gulf has turned that dynamic on its head.
Russian oil that struggled to find buyers last week is now a hot commodity. The U.S. has eased some sanctions, allowing purchases from key buyers of Russian crude. The soaring price of oil and natural gas will lead directly to higher profits for Russian producers.
Already, the discount that traders demanded to buy Russian oil in India has begun to reverse, with some traders trying to sell oil at prices above global benchmarks.
"The longer that this conflict goes on, the world will increasingly rely on both Russian crude oil and Russian refined products," said Naveen Das, senior crude analyst at ship-tracking data provider Kpler.
The turn of fortunes has given Russian President Vladimir Putin renewed swagger when it comes to energy. He threatened to cut off the remaining energy it supplies to Europe, before Europe's self-imposed deadline to stop buying Russian LNG and pipeline gas.
Other markets are opening now," Putin said on state television on Wednesday. "If they shut us down in a month or two, wouldn't it be better to stop now and move to those countries that are reliable partners?"
On Friday, Kremlin spokesman Dmitry Peskov told reporters that the war in Iran had fueled demand for Russian energy products.
Russia is among the world's largest oil exporters. Before events in Ukraine in early 2022, the country was the world's third-largest oil producer behind the U.S. and Saudi Arabia, and among the world's top three largest exporters, a position it maintained last year despite sanctions.
But Russia's barrels have been sold at record discounts, which squeezed the country's oil industry. In January, Russia's oil and gas revenue was the lowest since July 2020. Higher oil prices would help ease its fiscal pressure and potentially pull its economy back from a period of stagnation.
The conflict in the Gulf has sent oil and gas prices soaring, with global benchmark Brent crude up nearly 30% since the attacks started. Those higher prices would normally benefit producers everywhere. But disruption in the Gulf means Russia's main competitors there aren't able to take advantage.
To lessen the disruptions the conflict is causing in the oil market and at gas pumps, the U.S. on Friday loosened the tariffs that it had put in place to pressure Moscow over the events in Ukraine.
The Treasury Department issued a 30-day waiver to allow India -- a country whose roughly 40% oil imports depend on the flows at the Strait of Hormuz -- to buy Russian oil stranded at sea. It also issued a general license allowing transactions with the German branch of Russia's Rosneft oil company. The move keeps open a key oil refinery near Berlin.
Those moves did little to settle oil markets, with the price jumping sharply on Friday over fears that the shutdown in the Persian Gulf would lead to serious shortfalls in global oil supply.
Big buyers of Gulf energy in Asia, such as India, Japan and South Korea, are scrambling to secure supply from elsewhere, giving Russia fresh leverage. Europe, which now needs to compete for LNG cargoes with Asia, is seeing natural-gas prices surge.
Some Indian refineries are being offered Russian barrels at a premium of between $1 and $5 a barrel to the global benchmark Brent on a delivered basis for arrival at Indian ports this month and next, according to traders. That is in contrast to a discount of more than $10 a barrel below Brent in February.
Oil and LNG tankers are all but prevented from entering and leaving the Persian Gulf, where some 20% of the world's crude supply passes through each day. QatarEnergy, which produces roughly 20% of the world's LNG and related products, halted LNG production this week after facilities were hit by Iranian drones and declared force majeure two days later.
Currently, there are about 130 million barrels of Russian crude on the water, according to Kpler, equivalent to more oil than China and India import in an average week.
Some of those barrels are already purchased, but a substantial portion are waiting for buyers.
The developments in the Gulf have reignited fears in Europe about where it sources energy. Formerly heavily reliant on Russia, Europe has spent the past few years diversifying imports, relying more on the U.S. and the Middle East.
While the EU gets less than 10% of its LNG from Qatar, the disruptions in production there triggered a bidding war for what's left between European and Asian buyers, who are the most vulnerable to the Middle East supply loss and are willing to offer much higher prices.
With prices higher in Asia, several energy-laden LNG tankers have turned away from European destinations and headed toward Asia in the past few days, according to ship-data-tracking companies and analysts.
That combination of factors has made Putin's threat on Wednesday to cut off the remaining gas supply to Europe -- which currently accounts for 13% of Europe's gas and LNG imports -- more menacing than before.
If the Persian Gulf stays shut for a long time, Europeans worry it will force the region to reconsider its hard-line stance against re-establishing an energy relationship with Moscow.
"The current crisis in the Middle East has led to questions in some quarters about whether to go back to Russia or not," said Fatih Birol, head of the International Energy Agency, a group that represents the world's main energy-consuming nations. He said that would be a mistake.
European gas prices, above 50 euros a megawatt-hour on Friday, equivalent to around $58, are still nowhere near the 2022 level of around 300 euros a megawatt-hour.
Walking back on its commitment to phase out Russian gas and LNG gradually would be "politically disastrous," said Martin Senior, head of European LNG pricing at Argus Media.”
Not walking back on commitment to phase out Russian gas and LNG gradually would be for the EU both economically and politically disastrous.
1. Conflict Makes Russia's Oil a Hot Commodity. Feng, Rebecca. Wall Street Journal, Eastern edition; New York, N.Y.. 09 Mar 2026: B1.
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