Oil Eyes $100 as Iran Strikes Lift Russian Hopes

Russia is welcoming the U.S. and Israeli airstrikes on Iran, anticipating that surging oil prices will boost demand for Russian crude from friendly nations including China and India.

On the first trading day following the strikes, April West Texas Intermediate crude traded around $72 per barrel on April 2 local time, up approximately 8% from the previous session on March 27. International oil prices briefly exceeded $130 after the Ukraine war broke out in February 2022. Prices fell below $100 in August of that year and continued to decline, but have reversed course this year amid growing geopolitical uncertainty.

According to Politico, Kirill Dmitriev, head of Russia's sovereign wealth fund and economic envoy to President Vladimir Putin, expressed optimism on X (formerly Twitter) on March 28, the day of the U.S.-Israeli strikes on Iran, saying oil would "soon exceed $100 per barrel." Russia relies on oil exports for most of its war funding.

Should Iran blockade the Strait of Hormuz, through which Middle Eastern crude flows, oil prices could realistically surpass $100. Iran has repeatedly threatened to close the strait during escalating tensions with the U.S. and Israel, though it has never declared a full blockade beyond temporary shipping restrictions for military exercises.

China, the world's largest crude importer, would suffer the greatest impact from a Hormuz closure. Approximately one-third of China's oil imports pass through the strait. The Associated Press reported that China, which purchases most of Iran's 1.6 million barrels per day in crude exports, may need to find alternative suppliers, further driving up energy prices. If Middle Eastern crude becomes scarce, China will likely turn to Russian oil. According to U.S. Energy Information Administration data, India imported 34% of Russia's crude exports in 2024, while China took 26%.

Europe, which has largely cut Russian crude imports since the Ukraine war began, could face another energy crisis. Natural gas prices are also surging amid Middle East instability. April natural gas futures on the Dutch TTF exchange jumped more than 26% on April 2, briefly exceeding €40 per megawatt-hour. The Strait of Hormuz handles approximately 20% of global liquefied natural gas shipments in addition to crude oil.