Trump gives Putin a lifeline amid global energy crisis

MoscowIn the volcanic rivers of Kamchatka and the snow-fed torrents of Siberia, locals brave raging currents to hunt their prey. Russia has a long tradition of fishing in turbulent waters, a tradition that also extends to foreign policy. Donald Trump's attack on Iran has offered Vladimir Putin an unexpected lifeline. the rise in energy prices in a context of global instabilityHowever, just as these fishermen expose themselves to great dangers to catch the most coveted fish, short-term gains for the Russian economy threaten to become new risks if the conflict in the Middle East drags on.

While Volodymyr Zelensky sends aid to protect against Iranian drones The US bases on the Arabian Peninsula also see how the US president is taking steps to temporarily lift sanctions on Russian oil and could go further. Since the imposition of these restrictions against Russia's major oil companies in late November, The country's revenues from the sale of hydrocarbons had been plummeting.But the White House's fear of a global oil shortage is momentarily reviving Russian producers, who until now have been forced to offload their cargoes at ridiculously low prices. With Trump's permission, at least 20 to 30 million barrels stored on ships for weeks could be exceptionally allocated to India. Before the war in Iran, the price of Russia's benchmark crude, Urals, hovered around $45 a barrel, and now the current surge in demand has pushed it to around $70. This represents an unexpected injection of cash into the Kremlin's budget, which had been drawn up based on an estimated average price of $59 per barrel. This forced shift in US strategy undermines months of coordinated campaigning between Washington and Kyiv, combining sanctions and attacks on oil facilities, to cripple the Russian energy sector and hinder Putin's ability to finance the war in Ukraine. However, while Moscow will have more resources for weapons, the weight of hydrocarbons in the Russian government's accounts cannot be overestimated. They currently represent about 25% of the total, and even if the price of oil were to remain above projections, it would be insufficient to offset the immense deficit in the federal budget.

The "Dutch disease"

Furthermore, experts warn of a critical phenomenon for the Russian economy if the global energy crisis persists: the so-called "Dutch bad." While it may seem paradoxical, sustained growth in demand for crude oil at a high price could have a boomerang effect on Russian society. If large amounts of foreign currency from gas and oil sales begin to flow in, the ruble will strengthen even further, and only the energy industry will benefit. Meanwhile, other sectors will have more difficulty exporting and will lose competitiveness, while imports will become cheaper and local goods will be displaced. This will have a doubly devastating impact on a civilian economy already severely affected by sanctions and four years of prioritizing military spending. According to a Russian state-run survey published Tuesday by the Public Opinion Foundation and the Higher School of Economics, one in three small businesses is considering closing or selling. A simple stroll through the streets of Moscow, counting the closed shutters, reveals the devastating impact of the tax hikes aimed at funding the war effort.

The Russian Central Bank is resisting weakening the ruble or drastically lowering interest rates to avoid triggering another surge in inflation, yet it refuses to even consider the risk of stagflation. This is despite the fact that prices for citizens remain prohibitive, and January saw a year-on-year GDP decline of 2.1%.

For now, Putin is encouraging Russian producers to capitalize on the current situation. He himself has opened a new front to try to take advantage of the global chaos by offering to supply energy to Europe. However, this is contingent on the cessation of "political pressure" and the establishment of "long-term, sustainable cooperation." This invitation comes just days after the Russian president raised the possibility of immediately cutting off liquefied natural gas sales to EU countries, rather than waiting until 2027, when the EU aims to end its complete dependence on Russian energy. What Brussels sees as another attempt at blackmail, Moscow views as an opportunity: where there's trouble, there's plenty of fish.