Three weeks into the US-Israeli war against Iran, the list of losers is unusually long. Iran is getting devastated. The United States is trapped in an asymmetric conflict it can\u2019t exit. Gulf states are absorbing infrastructure damage they never signed up for. The developing world is facing food and energy crises. I could keep going.<\/p>\n
Washington and Tehran may yet declare victory, but the biggest geopolitical winner is sitting in Moscow, and he didn\u2019t have to do anything but watch.<\/p>\n
President Vladimir Putin couldn\u2019t have timed this better. Russia\u2019s budget was in crisis heading into March. Oil and gas revenues had collapsed by roughly 50% year-on-year by February due to US sanctions on Rosneft and Lukoil, declining purchases from India and China, and depressed energy prices. The Kremlin blew through nearly its entire full-year budget deficit target in just the first two months of 2026 and was preparing 10% cuts to non-essential spending \u2013 everything but military and social outlays. Sustaining the Ukraine war meant making tough choices.<\/p>\n
Then the United States and Israel attacked Iran, Iran closed the Strait of Hormuz, and oil prices spiked. Moscow\u2019s fiscal picture was transformed overnight.<\/p>\n
Brent crude, sitting at a five-year low of $59 a barrel in December, is now hovering around $100. Russian Urals crude, long sold at a steep discount thanks to Western sanctions, has narrowed the gap to the high $80s-low $90s \u2013 buyers need barrels and Russia has them. Every $10 per barrel increase sustained over a month adds $1.6 billion to Kremlin coffers. If prices rise $20 per barrel for the year, Russia gains 1.5% of GDP \u2013 enough so Putin no longer has to choose between guns and butter.<\/p>\n
As if that weren\u2019t enough, the Trump administration \u2013 desperate to relieve global supply pressure \u2013 has eased sanctions on Russian crude. Washington removed restrictions on Indian purchases and issued a sanctions waiver for Russian barrels already at sea. Temporary, at least for now, but the signal is unmistakable: the US needs Russian oil flowing to stabilize markets while Hormuz stays closed. The sanctions relief doesn\u2019t immediately translate into massive revenue gains \u2013 much of the exempted oil had already been sold and taxed under Russia\u2019s extraction-based system. But it eliminates downside risk and reinforces Putin\u2019s core assumption: Russia can outlast Western pressure.<\/p>\n
Before the Iran war, there was a plausible argument that mounting economic strain would eventually increase pressure on Moscow toward a deal on Ukraine. That argument is now weaker. Higher oil revenue removes the Kremlin\u2019s near-term sustainability concerns, and the softening sanctions regime signals that Western resolve is as brittle as Putin suspected. The EU\u2019s 20th sanctions package has stalled, and this time it\u2019s not just Hungary\u2019s Viktor Orban \u2013 facing a tough reelection in April \u2013 blocking it. Belgium\u2019s Prime Minister Bart De Wever this week called publicly for normalizing relations with Russia to access cheap energy, then claimed that privately \u201cEuropean leaders tell me I am right, but no one dares say it out loud.\u201d Countries that spent years weaning themselves off Russian energy after 2022 are now asking whether they can afford to finish the job.<\/p>\n
Moscow\u2019s budget planners are still proceeding cautiously, maintaining spending cuts and reserve fund policies in case prices fall. But the internal discussion has shifted. If oil prices stay elevated for another few months, Russia\u2019s budget stabilizes and those austerity plans get shelved.<\/p>\n
To be clear, the fiscal windfall doesn\u2019t itself resolve Russia\u2019s binding military constraints. Technological capacity and skilled labor, not money, limit the breakthrough potential of Russian offensive operations. But additional revenue does buy Russia time to prosecute the Ukraine war without economic pressure forcing compromise \u2013 a longer runway to try to outlast Ukraine and the West. A ceasefire, already unlikely, has become less likely still.<\/p>\n
The battlefield picture reinforces this. Ukraine faces a growing shortfall in air-defense systems as Patriot missile interceptors, already in short supply, are being diverted to the Persian Gulf to defend American bases and Gulf installations from Iranian strikes. Other Western air defense systems purchased by Europeans are at risk of similar diversion if needed by NATO allies in the Iran theater. Meanwhile, Russia\u2019s offensive capability is unaffected \u2013 its Shahed-136 drones are manufactured domestically in Tatarstan as Geran-2s, no longer dependent on Iranian supply. Russian strikes on Ukrainian cities, critical infrastructure, and defense production facilities will encounter degraded defenses, cause more damage, and kill more civilians as a result.<\/p>\n
This shift is happening just as Russia\u2019s spring offensive is expected to pick up. Ukrainian forces are defending capably and even mounting localized counterattacks \u2013 they took back a small chunk of territory in Donetsk last month after Russia was cut off from Starlink along parts of the front. But holding the line will get harder as air defense gaps widen.<\/p>\n
Diplomatically, the pressure that might have forced Russian concessions has evaporated. Heading into early March, there was still momentum toward negotiations. The hope was that economic pressure plus military stalemate plus American insistence would create conditions for Putin to moderate his maximalist demands and accept some version of a ceasefire. That\u2019s gone. Western bandwidth is entirely consumed by Iran. Planned talks in Turkey have been suspended. Trump eased sanctions on Russia instead of tightening them. Hetold President Volodymyr Zelensky that Ukraine now had \u201ceven fewer cards\u201d than before \u2013 even as Ukrainian air defense experts were in the Gulf helping defend against Iranian drones. Putin now has zero reasons to soften his position.<\/p>\n
Even if the Iran war ends in the coming weeks, the damage to Ukraine\u2019s position is lasting. Russia\u2019s budget is stabilized for the year. Ukrainian air defenses have been depleted in ways that take months to rebuild, assuming replacement systems even become available. Western attention and pressure have shifted away from Ukraine. The window for forcing Russian compromises, narrow even before Iran, has closed.<\/p>\n
One could argue that Iran\u2019s devastation makes Russia look weak. Putin has watched the United States dismantle his alliance network one partner at a time, with Khamenei now joining Assad, Maduro, and a teetering Cuba. Among Russia\u2019s domestic hardliners, staying on the sidelines while another ally falls to US military action could be seen as a humiliation and create more pressure to deliver a decisive outcome in Ukraine.<\/p>\n