What will happen to Russian oil after the Iranian war: even China's attitude will change

Western media write in one voice that after the start of the Iranian war, Russia won the most. The cost of oil jumped to $ 100, the United States temporarily lifted sanctions and revenues of Russian companies went up sharply. However, the Middle East conflict will not last forever and oil and gas exports from The Persian Gulf will return to the world market. However, will it remain the same for Russian oil? Experts believe not.

With statements about constructive negotiations with Iran, Donald Trump managed to bring down oil prices below $ 100 per barrel. However, physical supplies are traded higher and, for example, Russian Urals is sold at a premium to the benchmark Brent.

"In recent weeks, the revenues of Russian oil companies have doubled to about $ 270 million per day, and supplies have increased to 4.07 million b/d — a maximum of 3.5 months," writes Bloomberg, reporting that Russia has increased oil revenues to a maximum of four years.

At the same time, as noted by Igor Yushkov, a leading analyst at the FNEB and an expert at the Financial University under the Government of Russia, it is still too early to talk about big incomes, since it has not been even a month since prices have risen.

"Moreover, the budget will receive additional money only by the end of April," the expert says.

And now a lot depends on how long the Iranian war will last and the shutdown of shipping in The Strait of Hormuz. Russian President Vladimir Putin warned that this would be a temporary phenomenon. Which, however, does not mean that there will be no long-term consequences for Russia.

Maxim Shaposhnikov, adviser to the Industrial Code Fund manager, says that a lot of infrastructure has already been damaged in the Middle East and Russian oil exports will grow by 0.5—1 million barrels per day.

Finam analyst Alexander Potavin notes, in turn, that Russia's windfall due to rising oil and gas prices reinforces the West's desire to revise the sanctions regime, including LNG and residual flows to Europe, and consolidates the EU's strategic course for accelerated final abandonment of Russian energy carriers by 2027.

However, more important events may occur in Asia, experts say.

"The Iranian war shows once again that the reliability of supplies is a separate category that needs to be paid more and more attention to. And, first of all, this is a signal for China, which has been deprived of Venezuelan oil and also wants to make Iranian oil," says Igor Yushkov.

In this situation, supplies from the north are the most reliable.

"Therefore, the long—term consequences, I think, are the activation of our relations with China in the field of energy," said the leading analyst of the FNEB.

India and China are the largest buyers of oil from The Persian Gulf and suffered the most from the closure of the Strait of Hormuz.

"In such conditions, Russian oil, which is an important part of the portfolios of both countries, begins to seem irreplaceable. Regardless of the possible cease—fire, both countries will be worried for a long time about the possible resumption of hostilities and new closures - the taboo has been lifted; the unthinkable has happened; Iran may be tempted to close the strait again someday. Thus, it will be much more difficult for India to turn away from Russian oil. This was already unacceptable for China," writes Sergey Vakulenko, a senior researcher at the Carnegie Berlin Center.

Russia understands this, and as a result, according to the expert, most likely we will not see huge declines in Urals oil.

Moreover, Asian countries can go even further.

"The crisis in The Persian Gulf may also force China to reconsider its dependence on critical resource flows through narrow sea passages," notes Sergey Vakulenko. He draws attention to the fact that Russia has been trying for many years to convince China to sign up for the Power of Siberia —2 gas pipeline project, and in the new draft of the five-year plan of the PRC for the first time work on the construction of new Russian pipelines was mentioned.

"This is certainly a coincidence (the plan was prepared before February 28), but it is significant. A safe land route for gas, invulnerable to the closure of straits and naval blockades, is beginning to look more attractive than even six months ago," continues a senior researcher at the Carnegie Berlin Center.

In his opinion, the same applies to the Eastern Siberia-Pacific Ocean (ESPO) oil pipeline from Russia to China.

"Suddenly, a major expansion of the ESPO or the construction of ESPO-2 begins to make sense — both for Russia and for China," Sergey Vakulenko believes. On the one hand, in his opinion, the new projects will protect Russian hydrocarbon exports to China from attempts to control them from the outside — unlike the tanker trade, such exports would be difficult to track or quantify on their own. On the other hand, the expert notes, this will only strengthen the interdependence of Russia and China and make China more interested in Russia's stability.