Russia’s Economic Struggles before the Iran War

Just over a week ago, the Russian economy appeared to be in its worst state in recent times. The Russian economy was being deprived of much-needed energy revenues by low oil prices and sanctions, revenues that the Kremlin has used to fund its war in Ukraine. And in the last two weeks of February, Russian territorial gains actually went negative. However, the war in Iran has seemingly changed all of this. The Kremlin has enjoyed a sudden reversal of its fortunes as the Strait of Hormuz has essentially been closed and oil and gas production across the Middle East has been severely disrupted.

This has sent global energy prices surging, with oil prices soaring over $100 a barrel for the first time since 2022. Meanwhile, astonishingly, the US has suggested it may lift sanctions on Russian oil to cushion the blow of the war on the global oil market. Whilst the Kremlin, which has openly said it supports Iran and has reportedly even helped Iran target US troops, has thus far received basically no criticism from the Trump administration.

After the war in Iran began last weekend and amid Iranian attacks on oil tankers, shipping in the Strait of Hormuz effectively ground to a halt. Soon after this, following Iranian drone and missile strikes on energy facilities across the region, Saudi Aramco suspended operations at its largest oil refinery, and Qatar suspended gas production. As one might expect, energy costs across the globe skyrocketed. Brent crude futures, the international benchmark for global oil prices, climbed nearly 10% to a 13-month high of just over $80 a barrel.

After this jump, oil prices continued their upward trajectory when Trump said the war in Iran could last longer than the initially projected four to five weeks. Then over the weekend, with strikes across the region........

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