In yet more unintended blowback from Washington's Iran war gambit, now in its fourth week, President Vladimir Putin said Monday that Russian oil and gas companies must use windfall profits from the Iran war to reduce debt. It's been no secret that higher crude prices, amid the ongoing massive disruption to global energy supplies due to the Hormuz Strait effective closure, have been a boon to Russia as it continues to fund its war machine in Ukraine.
At a meeting with senior economic officials, Putin said Russian energy firms "should consider directing additional revenues... to pay off their debt to domestic banks." He underscored, "That would be a mature decision." It's not the first time of the war he's presented this as a 'wise' move before Russia's energy sector.
Russia's Urals crude climbed above $100 per barrel last week, after just prior to Trump's Operation Epic Fury it had been trading at steep discounts.
However, the situation drastically changed when the US Treasury Department issued a sanctions waiver this month covering Russian crude and petroleum shipments loaded between March 12 and April 11.
Soon after, several Asian countries reliant on Middle Eastern energy signaled plans to increase purchases of Russian oil.
Per reporting in Financial Times earlier in March, Russia is generating up to $150 million per day in extra budget revenue amid its increased taxes on oil exports to markets like China and India, with potential total added revenue reaching billions by the end of this month.
According to more of Putin's Monday words:
"Regarding the federal budget, it is also necessary to make balanced decisions concerning cyclical revenues to, I repeat, ensure the long-term balance of the country's main financial document," Putin told a meeting with officials.
"For effective macroeconomic policy, it is important to consider all significant factors and to proactively respond to external risks, which are currently manifesting sharply in global markets and within the system of international economic relations," he said.
As for reaction to all of this in the US, in predictable fashion Congressional Democrats slammed the US easing the pressure off Moscow, arguing Trump's move is an economic gift to Iran in the middle of a war that the president started.
The Ukrainians are very unhappy with these developments:
"Clown show doesn’t begin to describe it," Virginia Democrat Don Beyer said days ago in a post on X. In addition to sanctions waivers, the Trump administration released more than 45 million barrels of oil from its strategic reserves and temporarily waived a century-old shipping mandate in order to lower transport costs.
In the meantime, ongoing escalation in the Persian Gulf continues to indirectly benefit Russian energy, with deep uncertainty and instability still lingering for global markets...