Russian Oil Gets a Lifeline from the Iran War

By: Clasine Bernstein 

The Trump administration lifted sanctions on Russian oil in mid-March, calling it a temporary fix to calm energy markets during the war with Iran. The move allows the purchase and delivery of Russian oil already loaded on vessels as of March 12, applying until April 11.

European officials see it differently. To them, this looks like a gift for Moscow at exactly the wrong time. Russia’s economy was feeling the squeeze. The IMF had forecast 2026 economic growth at just 0.8%, with export revenues weakening and the fiscal deficit staying elevated. Financial pressure was starting to constrain Russia’s ability to fund the war in Ukraine. Then Iran closed the Strait of Hormuz and changed everything.

Oil prices jumped up 8.3% in a single week and 84% for the year. For Russia, higher prices combined with loosened sanctions mean more money flowing to the war effort.

European Council President António Costa pointed out the obvious problem: increasing economic pressure on Russia is what pushes it toward serious peace negotiations. Weakening sanctions does the opposite.

Treasury Secretary Scott Bessent insists the waivers are narrowly tailored and short-term, but markets don’t abide by labels. Once the U.S. signals flexibility, traders and insurers adjust their calculations accordingly. India has already responded by purchasing at least twenty million barrels of Russian oil since the first waiver was granted.

The problem is what happens in April. Oil prices haven’t dropped despite the administration releasing strategic reserves and easing sanctions on both Russian and Iranian oil. When the waivers expire on April 11, officials face an awkward choice: renew the relief and help U.S. adversaries, or reimpose sanctions and risk another price spike.

Russia is already angling for more. The Kremlin welcomed Washington’s moves to stabilize energy markets, noting that Russian and American interests align on this issue and making it clear that Moscow wants the relief extended. For Ukraine, this is a disaster. Economic sanctions had been one of the few effective tools for maintaining pressure on Russia while Western military aid remained limited. Now that the pressure is easing because of a war happening thousands of miles away.

The risk extends to Europe, too. Once the U.S. starts loosening sanctions, it gives political cover to EU members who want to follow suit. Hungary and Slovakia have been pushing to resume Russian energy purchases, and American policy just made their argument easier.

There’s no question the Iran war created a genuine energy crisis. The Strait of Hormuz normally carries about 20% of global oil supplies, but Iran effectively shut it down with drone strikes on tankers. Asian countries are facing fuel shortages, prices have spiked worldwide, and the Philippines declared a national energy emergency.

Solving that crisis by bankrolling Russia’s war machine is still a bad trade. Moscow gets revenue, Ukraine’s position weakens, and come April 11, the Trump administration will have to choose between extending relief to Putin or letting oil prices surge again. The waivers may expire in a month, but their consequences won’t.