Oil and Gas Prices Peak Again: How the Middle East Conflict Benefits Moscow and What This Means for Belarus

Prices Higher Than Spring Peak

The price of Russian Urals crude oil again surpassed the $100 mark back on September 10. On the 17th, it traded at $120 per barrel, and on September 25 — around $114, which is higher than the previous peak this spring. At that time, amid the start of the war in Iran, prices for Russian oil first exceeded the $110 per barrel mark in 13 years.

In parallel, gas prices have significantly increased, now selling for $850—900, although just a month ago it cost around $700.

All this, undoubtedly, plays into Russia's hands, as it once again gets the opportunity to significantly increase foreign currency revenues for its budget.

Putin Profiting Again, But With Nuances

"It is indeed good for Russia when oil and gas prices rise, as this is one of its main export positions. As a result, foreign currency revenue significantly increases. But it must be understood that the implementation of contracts at the current price will occur with a delay of one and a half to two months. Therefore, the current jumps in oil prices will affect Russia's balance of payments only in October-November," notes BEROC expert Nastassia Luzgina.

However, the current situation still differs from that in the spring, when Russia also benefited from the conflict in Iran. This is because the Russian Federation is now severely suffering from damage to its oil and gas infrastructure.

"Strikes on oil refineries, undoubtedly, negatively affect Russian trade and the economy in general, in terms of the fact that the Russian Federation is now forced to purchase oil products itself from other countries at high prices," notes Luzgina.

Overall, the conflict in the Middle East rather plays into Russia's hands, since regardless of the situation in Iran, Ukraine would still strike Russian oil refineries, and without expensive oil, these strikes would be felt much more painfully by Russia. High oil and gas prices compensate for the losses.

Павялічыць

Russian Budget Did Not Account for This

It is also worth noting that the current price of Urals oil is almost double the level planned in the Russian budget for 2026 — $59 per barrel. The average price of Russian oil since early September is $81 per barrel.

"The high price of oil is undoubtedly an important point for the Russian economy, but it does not cancel out other problems Russia is forced to contend with. There are inflation problems, which is why the Central Bank of the Russian Federation did not lower the key rate, as the regulator fears that inflation could accelerate, partly due to increased fuel prices."

At the same time, the expert notes that it is difficult to make predictions now based solely on economic indicators, as much depends precisely on military and political actions.

Will Prices Continue to Rise? 

"It is unknown how Russia and Ukraine will behave regarding strikes on energy infrastructure. For now, we see no changes in this regard. And this is a very important point for Russia itself.

Secondly, much depends on how the oil situation will develop in global markets. Currently, the situation for the Russian economy in this regard is developing positively. Oil and gas are becoming more expensive, and, as some analysts believe, price growth will continue in the near future," says the expert.

The rise in oil prices is currently influenced not only by the situation in the Strait of Hormuz but also by recent damage to the oil pipeline in Saudi Arabia. And since its restoration, according to various estimates, will take about a month, it can be assumed that a drop in prices should not be expected in the near future.

For the Russian economy, this is a plus, as it is for the Belarusian economy, which is heavily dependent on the economic situation in Russia. But overall for the global economy, this is, of course, a problem that could cause a wave of inflation.

"And through problems in the global economy, the economies of Russia and, consequently, Belarus may also begin to suffer," notes Luzgina.

Oil Saved the Ruble from Falling

At the same time, we already see that the rise in oil prices has begun to affect the exchange rate of the Russian ruble, which before this price surge had started to depreciate and drag down the Belarusian ruble.

Павялічыць

"If trends do not change, the Russian ruble will feel stable at least until the end of the year. Fluctuations are possible, but most likely, if they occur, they will be minimal.

Most likely, the exchange rate will remain approximately at the same values as now. This is because high oil prices undoubtedly significantly support the Russian economy even in the presence of several other problems," notes Luzgina.

Regarding the situation with the Belarusian ruble, according to the expert, it will also remain stable, like the Russian one, as no internal Belarusian factors that could negatively affect the exchange rate are observed.

"The population and non-resident companies continue to sell foreign currency, which more than compensates for the demand from Belarusian enterprises. The decline of the Russian ruble, observed in the last month, has ceased, so there are no factors from Russia that would negatively impact the Belarusian ruble's exchange rate," believes the economist.

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