Israel's Attack Has Shot Up Oil Prices. Russia Is in the Black: Black Gold Is Our Everything

The oil rally did not start today. The market was preparing for higher oil prices, or more precisely, for a possible shortage of black gold. The reasons are the European Union's determination to lower the oil price ceiling from $60 to $45 per barrel of Russian oil. And possible new sanctions against Tehran.

On the eve of Israel's attack on Iran, oil prices predictably responded with an increase. Brent crude added almost 1.8%, rising to $68 per barrel.

And after the blows , on June 13, the barrel returned to January levels and is now worth $75.6. The second oil benchmark, WTI, is trading today at $74.5.

Over the course of a day, oil prices soared by 9%, and at one point by 13%.

Economist, analyst, and director of strategy at Finam Yaroslav Kabakov notes that the escalation of the conflict has sharply increased the risks of supply disruptions from the Persian Gulf.

“Oil is responding with growth, and Brent has already broken through $78.5, which is above the psychological level of $70,” says Kabakov.

Simply put, supply risks are now priced into oil prices.

“Especially against the backdrop of concerns about the Strait of Hormuz, through which about 20 million barrels of oil pass per day,” clarifies Yaroslav Kabakov, director of strategy at Finam.

OPEC+ is increasing production and is able to replace Iran's share, but almost 25% of the world oil market is now in question. And this is a serious challenge. And the European Commission is now unlikely to be able to pinch Russian oil with a "ceiling" of $45 per barrel.

Investment bank JP Morgan predicts that the hot phase of the conflict in the Middle East could raise prices to $120 per barrel.

Bloomberg also adjusted its forecast due to the sharp aggravation of the geopolitical situation. In a tough scenario - the cessation of shipping in the Strait of Hormuz - oil is predicted to reach $130 per barrel .

Investment strategist Anton Vesenniy suggests not to draw any drastic conclusions in his Telegram channel “Lazy Investor,” because oil “always soars during Middle Eastern turmoil.” But even the blockade of the Strait of Hormuz is not a long-term driver of oil growth.

"For prices to rise or fall sustainably, fundamental shifts in the global economy and demand for energy resources are needed. For example, trade wars, risks of a global recession, a mass transition to electric vehicles, etc.

Nothing is over, it will still shake. But I don't believe in a large-scale protracted war (the two countries do not have a common border). It is not the first time we have seen threats of heavenly punishment, and then a drain and calm. Oil always returns to market equilibrium," notes Anton Vesenniy.

For the Russian budget, whose annual deficit has tripled (3.8 trillion rubles, or 1.7% of GDP), this is excellent news.

Novye Izvestia cited data from the Finance Ministry's recent report on the preliminary budget execution for the first five months of the year. During this time, oil and gas reduced its contribution to the state treasury by 14%. In May alone, father gas and mother oil shorted the country by 35%.

At this rate and with “yesterday’s” oil prices, the Ministry of Finance would hardly have been able to reach the planned figure for oil and gas revenues (8.3 trillion rubles per year) by the end of the year.

Not everything is smooth in such a branch of Russian industry as mineral extraction, which showed negative dynamics (-3.7%). Russian oil production fell by 4.3% due to the agreement with OPEC+, gas production fell by 5.6% due to the reduction in exports.

If the forecasts of Western banks come true and the world sees a rapid rise in oil prices (over $100 per barrel), then this will be a most pleasant surprise for the Russian Ministry of Finance, to which the Middle East conflict will bring petrodollars on a platter to cover the growing deficit.

According to the results of January-May, the budget gap "spread" to 3.4 trillion rubles with an annual plan of 3.8 trillion rubles. In the initial version, the cash gap was planned at 1.2 trillion rubles. Due to the slowdown in revenues and the growth of expenses, this parameter had to be revised and increased to 3.8 trillion, which is 1.7% of GDP

America, as the main enemy of Iranian oil, puts pressure on Tehran under any president. The Donald Trump administration, having opened negotiations on the nuclear deal, continued to tighten the noose and introduced more sanctions against the shadow fleet. In 2025, 13 tankers and 17 companies were hit. Anything to reduce oil exports from the country. Up to zero, which is what the US Treasury Department dreamed about out loud.

Former President Joe Biden followed the same line, but in response, Iran did not reduce, but increased exports of black gold. Production and export volumes remained impressive - about 1.5 million barrels per day. The largest importer of Iranian oil is China. India ranks second on the list of partners.