Is the Third Gulf War an unexpected economic opportunity for? The short-term breath, forcing it to face the harsh reality of its limited capabilities in Ukraine and internationally? Estimates show a “grey” zone between profit and benefit, far from simplifications.
Profits and opportunities
How the war raging in the country affects Moscow is easy to answer in economic terms. The closure of the Straits of Hormuz automatically meant the withdrawal of 20% of oil and natural gas reserves from the world market, triggering a barrage of increases in fuel and food. The gap was filled by Russian oil companies, which, also favored by the White House’s decision to temporarily lift sanctions on Russian oil products, saw their revenues set a four-year record in the first three weeks of the conflict between the US-Israeli coalition and the. Daily revenue literally doubled from $135 million to $270 million, with Russian President Vladimir Putin warning of the ephemerality of the moment.
There are also military benefits, since the war diverts valuable resources from strengthening Kiev. “The rapid depletion of ammunition, especially for air defense systems, limits the material assistance that the United States is willing to provide to Ukraine. This improves Russia’s position on the battlefield and makes its airstrikes more lethal.” emphasizes Thomas Graham, a fellow at the Council of Foreign Relations. At the same time, he connects the expected spring offensive of Russian forces with the development of hostilities in the Middle East. “The longer the conflict in the Gulf lasts, the more likely we will have developments in the Russia-Ukraine war. Russia will get a steady flow of funds to cover rising costs while the US runs out of weapons systems it could otherwise sell to European countries to send to Ukraine.”
Losses and stagnation
There is certainly another side to the coin. The impressive progress that Ukraine’s defense industry has made in recent years in the field of aeronautics, and in particular drones, makes Russia’s energy infrastructure a prime target. In a recent report, Reuters claims that 40% of the country’s oil export capacity has been disabled by Ukrainian drone attacks, highlighting how the “supership” of the Russian economy is also an Achilles’ heel.
“In Russia, where the oil and gas industry accounts for one-fifth of gross domestic product and 30% to 50% of federal budget revenue, the calculation was simple. For every $10 increase in the price of oil, an additional $1.6 billion in monthly tax revenue was expected,” Le Monde reports, adding: “In Ukraine, the reverse calculation was just as simple. Before the conflict in Iran, Russia managed, despite the sanctions, to export about 5 million barrels per day, which sold for about $70 a barrel. The Ukrainian attacks of the past few days are believed to have reduced export capacity by 2 million barrels. So the remaining 3 million barrels are currently selling for over $100, minus any excess profits. In the end, Russia, which sought to win more, wins as before. For example, a few days ago the inactivity of the Russian port of Ust-Luga in the Baltic Sea, where an oil export terminal is hosted, automatically meant the loss of 700,000 barrels per day.
The losses are not limited to the economy. The new Middle East war, with its global economic implications, confirms Moscow’s limited ability to play a leading role.
The quadripartite meeting of the foreign ministers of Pakistan, Saudi Arabia, Turkey and Egypt, on developments on the war front and the possibility of a gradual de-escalation, is emphatic evidence that the negotiating weight has shifted away from the traditional Great Powers, including Russia.
Moreover, the limited military support that Moscow has so far provided to Tehran – mainly through digital observation tools to locate targets – probably vindicates those who refer to the limited military capabilities of the Russian armed forces. “Just as it was unable to save its allies in Syria and Venezuela, it is unable to help Iran. With its global influence collapsing, the Russian regime has been reduced to the role of a spectator,” author and historian Sergei Ratchenko notes in an article in Foreign Policy magazine.
A finding that partly explains why Moscow’s adversaries, such as Ukrainian Foreign Minister Andriy Sibykha, gleefully argue that “Russia is not a reliable security provider for its friends.”
