As global oil prices continue to fall below pre-war levels, the decline following a US-Iran agreement has raised questions over how long Russia can preserve the geopolitical advantage it gained during months of heightened tensions in the Middle East.
The conflict between Israel and Iran, which began on Feb. 28, and fears of supply disruptions through the Strait of Hormuz pushed oil prices to their highest levels in years, affecting not only producing countries but also the broader energy, shipping and trade sectors.
In the early stages of the conflict, markets priced in the risk of a prolonged closure of the Strait of Hormuz, through which around one-fifth of global oil trade passes. As a result, Brent crude stabilized at around $100 per barrel.
However, risk premiums began to unwind rapidly as the US President Donald Trump administration signaled progress in negotiations with Iran and both sides moved closer to an agreement.
Brent crude settled below $90 for the first time since March 10, ending June 12 at $87.33 per barrel.
The decline accelerated after Iran and the United States announced they had reached a 14-point agreement on June 14, brokered by Pakistan, aimed at ending the conflict and resolving outstanding issues through negotiations.
Brent crude fell 5.8% on June 15 to settle at $82.24 per barrel.
As optimism surrounding the agreement continued, Brent dropped below $80 on June 16 for the first time since March 2, closing at $78.67.
The agreement, later known as the Islamabad Accord, entered into force on June 18 after being digitally signed by Iranian President Masoud Pezeshkian and Trump.
With commercial shipping, particularly for crude oil and refined products, through Hormuz recovering to around 25% of pre-war levels over the past five days, Brent crude settled at $73.87 per barrel on Wednesday, falling below $75 for the first time since Feb. 27 and returning to its pre-war level.
- High oil prices give Moscow breathing room
After facing sweeping Western sanctions following the Russia-Ukraine war, Moscow regained importance in global energy markets in recent months as supply concerns drove oil prices higher.
The Trump administration temporarily eased some sanctions on Russian oil to help relieve market tightness. The temporary relief, combined with higher oil prices, supported Russia's energy revenues.
According to Russia's Sberbank, higher oil prices boosted the country's commodity export revenues, prompting the lender to raise its 2026 commodity export forecast.
Finance Minister Anton Siluanov also said the increase in oil prices generated roughly 200 billion rubles ($2.7 billion) in additional budget revenue.
However, the subsequent decline in oil prices and easing concerns over Middle East supply disruptions have raised questions over whether Russia can sustain those gains.
Under a general license issued by the Office of Foreign Assets Control (OFAC) in April, sanctions relief covering certain transactions involving Russian-origin crude oil and petroleum products was set to expire on June 17.
The Treasury did not announce an extension on that date, while the Trump administration has not clarified whether the lack of renewal means the sanctions waiver has effectively lapsed.
Separately, Russian Deputy Foreign Minister Sergei Ryabkov said Moscow and Washington plan to hold another round of consultations aimed at resolving long-standing bilateral issues.
Ryabkov said he expects the talks to take place before the end of the summer despite continued difficulties in the dialogue, reinforcing expectations that diplomatic channels between the two countries will remain open.
- Tide could turn against Russia
Ajay Parmar, director of Oil Markets and Energy Transition at Independent Commodity Intelligence Services (ICIS), said Western countries would have been far less likely to ease sanctions on Russia without the crisis.
Speaking to Anadolu, Parmar said for Russia, sustained low oil prices would be highly negative as it is heavily dependent on oil revenues.
"As long as prices remain elevated, Russia is likely to continue benefiting from the situation," he added.
Kate Dourian, a non-resident fellow at the Arab Gulf States Institute in Washington, said the conflict in the Middle East delivered an unexpected windfall for Russia earlier this year, with higher oil prices nearly doubling the country's crude export revenues in March.
However, Dourian said those gains are unlikely to last. "Russian oil and gas revenues fell sharply in 2025, the cost of moving crude through the shadow fleet has risen tenfold since 2022, and the moment Gulf supply normalizes, Russia loses that advantage."
"Higher prices have helped, but they have not solved Russia's fiscal problem — they have just deferred it," she said.
By Duygu Alhan
Anadolu Agency
energy@aa.com.tr
