Eurasia Press & News
The current interim situation between peace and war suits Moscow quite well. On the one hand, continued instability in the Persian Gulf prevents oil prices from falling. On the other hand, the conflict is not escalating into a full-scale war that could threaten other Russian interests.
The prospect of an end to the US-Iran conflict is not good news for Moscow. The surge in oil prices triggered by the war allowed Russia to smooth over serious budget problems, avoiding what seemed inevitable cuts, while the fighting has drawn international attention and US weapons away from Ukraine.
However, for now, these are merely preliminary agreements between Tehran and Washington, with regularly disrupted talks and unclear prospects. And the situation of the Strait of Hormuz being open and closed is perfectly acceptable to Russia. The main thing is that the parties don’t reach a final agreement.
Profit from Hormuz
Moscow’s main benefit from the US-Iran war was higher oil prices. For example, in May alone, the Russian federal budget received 175 billion rubles in additional oil and gas revenues, which was very welcome given the mounting financial problems. While this still didn’t save the Kremlin from a budget deficit, it at least allowed it to postpone already planned cuts in government spending.
Looking at the war’s impact on Russian-Iranian relations, the results for Moscow have been mixed, combining new losses and new benefits. On the one hand, Russia was forced to suspend construction of the Bushehr Nuclear Power Plant and evacuate personnel from the site, as well as put other projects on hold, including the Rasht-Astara railway and the Sirik Thermal Power Plant. Moreover, resuming work on these projects will be difficult due to the extensive destruction of Iranian infrastructure.
On the other hand, the fighting and the American blockade forced Iran to intensify cooperation with Russia in other areas. Having lost the ability to fully utilize its ports in the Persian Gulf and Gulf of Oman, Tehran was forced to seek alternative routes of interaction with the outside world. One such route was trade with Russia via the Caspian Sea.
According to The New York Times, approximately two million tons of wheat shipments were diverted to the Caspian Sea. And according to the Russian Ministry of Transport, Russia has increased grain exports to Iran by 81% since the beginning of the year. All major Russian ports on the Caspian Sea recorded record cargo turnover for January through May: in Astrakhan and Ola, it almost doubled , and in Makhachkala, it increased by 50 %.
The increased cargo flow not only creates incentives for the development of Caspian infrastructure but also brings political benefits to Moscow. Iran’s dependence on Russia is deepening as it shifts its trade from the volatile Persian Gulf to the tranquil Caspian Sea. However, the potential for expanding Russian-Iranian trade remains limited by the limited range of goods the two countries can offer each other.
A similar thing is happening with arms supplies. It’s not that the war has turned Russia into Iran’s primary and irreplaceable arms supplier, but it has significantly strengthened its position. Moscow is now supplying Tehran with drone components and Geran attack drones —Russian-modernized versions of the Iranian Shahed-136 UAVs. All of this is also happening via the Caspian Sea, which Tehran is trying to turn into a “lifeline” supplying it with food and weapons.
Threat of agreement
The agreement between Iran and the US potentially threatens Russia’s main gain from the war: energy prices. As soon as the ceasefire memorandum was signed , oil prices immediately plummeted. The same thing happened after the US approved a 60-day permit for Iranian oil exports on June 22, suspending sanctions.
If the unblocking of the Strait of Hormuz is accompanied by the return of oil exports from Iran, this will significantly change the situation on the global market. After all, in the Iranian case, we are talking about sanctions that have been in place since the early 2010s and were only lifted for a couple of years in 2016–2017 after the signing of the nuclear deal. Trump reinstated them in full in 2018.
If the lifting of US sanctions holds, Iran will be able to supply oil not only to China but also to other countries around the world. In recent years, it has exported approximately 1.5 million barrels per day, and at its peak before the return of sanctions, it was 2.7 million barrels. Clearly, these aren’t market-shaking volumes, but even the anticipation of Iranian oil’s return could further lower prices.
Even during the previous nuclear deal between Iran and the US in 2015, the Russian Foreign Ministry informally cited two arguments against the agreement: oil exports and the risk of Tehran’s reorientation toward the West. The latter is unlikely today—following military action with the US and the deepening rift with the EU, an Iranian pivot to the West is unlikely. Western investors will also be hesitant to invest in the Islamic Republic even if the main sanctions are lifted—the memory of the dismal fate of investments after Trump scrapped the previous nuclear deal in 2018 is still fresh.
But the return of oil revenues could now give Tehran a chance to improve its economic situation. At the very least, it has hope for Asian businesses, which are more willing than Europeans to invest in the economies of such regimes. This means Iran will be able to diversify its economic ties, reducing its dependence on Russia.
Fears about the future
The current US-Iran negotiations are a rollercoaster ride. They’re up and down, but the structure itself isn’t falling apart yet. At least some agreements have already been reached: the parties adopted a roadmap for further action, agreed on a mechanism for maintaining the ceasefire in Lebanon, established an incident prevention line in the Strait of Hormuz, and even went so far as to suspend US sanctions on Iranian oil.
However, the situation remains tense. Meetings are constantly being cancelled or postponed, shooting in Lebanon regularly resumes, Trump periodically threatens more bombings, and there have been several reports that Iran is again blocking the Strait of Hormuz.
This intermediate state between peace and war suits Moscow just fine . On the one hand, continued instability in the Persian Gulf region prevents oil prices from falling. On the other hand, the conflict does not escalate into a full-scale war that could threaten other Russian interests. An escalation of the standoff over Iran would jeopardize Russian investments in neighboring Arab monarchies and could destabilize Russia’s neighboring regions of the South Caucasus and Central Asia.
The current situation is a near-perfect combination of circumstances for Russia, allowing it to simultaneously profit from higher oil prices and increase its influence in Iran. Even if Tehran and Washington reach a comprehensive agreement, doubts about its sustainability will long hamper both the development of Iranian contacts with the West and the return of oil prices to pre-war levels.
