Iran war sparks multi-billion-dollar windfall for Russian oil companies

Shares of Russia’s top oil producers soared to multi-month highs on the Moscow Exchange following the US-Israeli operation against Iran, triggering the most severe global energy shock since the 1970s, The Moscow Times reports.

Since February 27, the combined market capitalization of Rosneft, Lukoil, Gazprom Neft, Surgutneftegaz, and Tatneft has risen by 1.969 trillion rubles (around $25 billion at current exchange rates), according to exchange data.

Rosneft’s shares jumped 25% in just a week and a half, boosting the company’s market value by 1.045 trillion rubles. Lukoil rose 10.2%, Gazprom Neft climbed 11%, Tatneft surged 20%, and Surgutneftegaz gained 7.2%.

Only two months ago, Russian oil producers had been forced to cut output after Urals crude prices fell to $40 per barrel, leaving tens of millions of barrels unsold. Now, with the US temporarily allowing oil sales to India without sanctions, Urals crude has climbed to $70 per barrel and is selling at a premium over Brent in Indian ports rather than at a discount.

“This provides oil producers with an additional revenue of $8–10 million per day, directly supporting their cash flows,” said Vladimir Chernov, analyst at Freedom Finance Global.

German security expert Janis Kluge added that lifting US sanctions on Russian oil will not solve global supply shortages but will funnel billions of dollars to President Vladimir Putin. “Russian barrels were already flowing to India and China, but it was complicated, slow, and costly. Now it will become significantly easier,” Kluge explained.

For Russian oil companies, which faced a 2–3 fold decline in profits last year and ended the year producing oil at a loss on half their fields, the current situation represents a “noticeable improvement in pricing conditions,” Chernov said. “The main beneficiaries are Rosneft, Lukoil, and Surgutneftegaz.”

The rebound also bodes well for Russia’s state budget, which began the year with a sharp decline in oil and gas revenues. Alfa-Bank forecasts that commodity receipts in March could reach 800–900 billion rubles, more than double January–February levels.

By Vafa Guliyeva