The war in the Middle East could decide the fate of Ukraine’s fight against Russia. Ukrainian President Volodymyr Zelensky says that Israeli “strikes have led to a sharp rise in oil prices,” which is a negative factor. According to him, “the Russians are strengthening due to higher revenues from oil exports,” UNIAN reports. 

“If there are price caps, the price will be limited, so probably the risks will decrease. Although someone will circumvent even that. That is, you cannot completely avoid the risks,” the president explains.

He claims that Ukraine will increase proposals to the American side for the introduction of price caps and sanctions against Russia’s energy sector.

“I will soon be in contact with the American side, probably with the president, and we will raise this issue,” Zelenskyy states.

At the same time, he draws attention to the military aspect.

“If we say that Iran is an ally of the Russians in supplying weapons, then have serious strikes been inflicted on the production of Shaheds and rockets, and other capabilities? We hope that it will decrease,” he says. 

Furthermore, he notes that the escalation in the Middle East leads to increased aid to Israel from the US.

“No one challenges the relationship between America and Israel, but we would like the aid to Ukraine not to decrease because of this,” the Ukrainian president stressed and recalled that previous tensions “slowed down aid to Ukraine.”

Earlier, expert Abbas Galliamov said that the Kremlin is losing one of its key bargaining chips in negotiations with Donald Trump amid Israel’s strikes on Iran. Up to 13 June, there was a kind of trade-off: “Ukraine in exchange for Iran.”

According to him, Trump would offer Putin not to put too much pressure on him over Ukraine for now, but in return, he counted on the Russian president’s support in negotiations with Tehran on its nuclear program. 

On 12 June, Russian President Vladimir Putin initiated a new phase of government discussions on the State Rearmament Program for 2027–2036, with the agenda focused on advancing air defense, space systems, drone capabilities, and robotic technologies, according to a 13 June report from the Institute for the Study of War (ISW). The overhaul is part of Russia’s preparation for a prolonged war with Ukraine and potential future conflict with NATO, the think tank says.

During the meeting, Putin claimed that Russia’s air defense systems had ostensibly intercepted over 80,000 aerial targets since February 2022. Of these, 7,500 were described as operational-tactical and cruise missiles, which Putin said were “almost all” Western-made. He argued that Russia’s war in Ukraine demonstrated the need for a “universal air defense system” that can counter all types of projectiles.

Focus on AI, space capabilities, real-time command systems, naval rebuilding

Putin also emphasized the necessity for advanced digital technologies and artificial intelligence (AI) to be deeply embedded in Russian military systems. He outlined goals to develop a fleet of new, unspecified spacecraft aimed at improving reconnaissance and enabling real-time command and control capabilities. The Kremlin is also investing in the modernization of the Russian Navy and seeking to rebuild the Black Sea Fleet, which has suffered heavy losses due to Ukrainian attacks.

“Putin’s statements regarding the need for enhanced Russian air defense systems are likely in part a response to Ukraine’s ‘Operation Spider Web,’ in which Ukrainian forces demonstrated an ability to achieve operational surprise and launch drones against airbases in Russia’s deep rear, highlighting the inability of air defenses in these areas to repel short-range Ukrainian first-person view (FPV) drone strikes,” ISW wrote.

Oil revenues may factor into strategy

Despite its ambitions, Russia’s ability to finance the vast rearmament remains unclear, ISW says. According to the think tank, the country’s defense industrial base (DIB) had already struggled with fulfilling both domestic and foreign military contracts before Western sanctions were imposed in 2022 in response to the full-scale invasion of Ukraine.

 ISW suggests that rising oil prices—partly triggered by Israeli strikes against Iran—could help Russia finance some of its military goals if those prices remain elevated over the medium- to long-term.

Israel’s attack on Iran may have revived Moscow’s oil revenues for war

The think tank concludes that the Kremlin is likely using battlefield lessons from its war in Ukraine to “inform adaptations of Russia’s military and preparing Russia’s DIB for a protracted war against Ukraine and a potential confrontation with NATO.”

“We don’t know if an exchange of nuclear strikes will begin.” Nuclear conflict risk between Iran and Israel threatens not only the Middle East but also Ukraine, says former Ukrainian Foreign Minister Volodymyr Ohryzko, Radio NV reports. 

The West might shift its focus to a new crisis, while Russia could financially benefit from rising oil prices.

“If, after all these events, Iran reduces its support to Russia, that would be in our interests,” the diplomat notes.

At the same time, he warned that Israel’s actions might have a dangerous effect: “Who has power is right, and Iran will certainly respond to that.”

Ohryzko emphasizes that Tehran has already declared a strong response, using not only drones but also cruise and ballistic missiles.

“We don’t know what else is stored in Iran’s other sites, whether there are already ready nuclear warheads,” he adds. 

According to the expert, Israel’s possession of nuclear weapons is almost an objective reality. Therefore, the risk of nuclear escalation becomes not hypothetical but an extremely realistic scenario.

“So, we don’t know if at some point an exchange of nuclear strikes will begin, and that would be not just dangerous, but horrific,” Ohryzko stresses.

Besides the military threat, there is another consequence — rising energy prices.

“There are reports that oil prices jumped by 12%. That means Russia will profit from this,” the former minister notes. 

In such a situation, Ukraine risks losing part of the West’s attention while simultaneously facing the economic strengthening of its main enemy.

Oil prices surged by up to 14% following Israeli military strikes on Iranian targets, Bloomberg reported on 13 June. The escalation immediately rattled global energy markets, with crude benchmarks jumping sharply amid fears of wider conflict in the Persian Gulf.

Crude markets react to military escalation in the Middle East

According to Bloomberg, West Texas Intermediate (WTI) crude topped $77 per barrel at one stage—the biggest intraday gain since May 2020—before easing to around $73. European natural gas also rallied, while gold approached record highs as investors sought safe-haven assets.

Israel targets Iranian nuclear and missile facilities

Last night, Israel struck multiple locations across Iran, including the Natanz nuclear site and facilities in Tabriz. Israeli Prime Minister Benjamin Netanyahu said the strikes were aimed at neutralizing Iran’s nuclear and ballistic missile capabilities and confirmed that the campaign would continue. Hours later, the Israel Defense Forces stated that Iran responded with a wave of over 100 drones, and further missile retaliation was anticipated.

OPEC+ and IEA prepare for potential supply crisis

Analysts at SEB AB told Bloomberg that markets are not factoring in deep damage to Iranian infrastructure or full disruption through Hormuz. Still, the International Energy Agency has confirmed its readiness to release emergency reserves if needed. Meanwhile, OPEC+—with most spare capacity located in the Gulf—could raise production to stabilize prices, should the situation deteriorate further.

Russia’s reliance on oil and gas exports

In 2024, Russia’s oil and gas sector accounted for about 30 % of its federal budget revenue. Meanwhile, Russia’s military spending in 2025 is projected at 7.7 % of GDP and 12% increase against 2024—reflecting a highly militarized economy prioritizing arms and war-related production.

Today, there is interesting news from the Middle East.

Here, OPEC has made a decisive move to punish member states violating production quotas by ramping up output and pushing oil prices to new lows. As the global markets react, the shockwaves hit Russia the hardest, with its economy, already strangled by sanctions and inflation, now gasping for air under the weight of collapsing revenues and shrinking influence within the oil cartel.

OPEC+ raises output, sending oil prices tumbling

Recently, OPEC+ announced plans for a significant increase in oil production for July, adding 411,000 barrels per day. This is the third consecutive monthly hike, and the move aims to regain market share, and discipline overproducing members like Russia, Iraq, and Kazakhstan. Despite the risk of oversupply, the group, led by Saudi Arabia, is prioritizing volume over price to reassert its influence in the global oil market, building on its previous decision not to increase prices.

The immediate effect of this decision has been a notable decline in oil prices. Brent Crude, sourced from the North Sea, has fallen to approximately 65 dollars per barrel, while the West Texas Intermediate produced in the United States is trading around 63 dollars, marking the lowest levels since early 2021. Analysts anticipate that this trend may continue, with forecasts suggesting that Brent Crude could hold the same reduced price for the entire year. Goldman Sachs projects that oil prices might average 60 dollars per barrel this year and potentially dip to 56 dollars in 2026. In more extreme scenarios, where global economic conditions worsen significantly, prices could even fall below 50 dollars per barrel.

Russian crude slides below budgeted threshold

For Russia, these developments pose significant challenges. As of early June 2025, the price of Russian Urals crude oil has fallen below 50 dollars per barrel, marking its lowest level since June 2023. Specifically, in April, Urals crude was priced at around 47.50 dollars. This is extremely below the 70-dollar benchmark used in the initial Russian budget planning for the year. It is estimated that each 10-dollar drop in oil prices costs Russia approximately 17 billion dollars annually. The resulting revenue gap of around 40 billion dollars is expected to widen the deficit to 10% of the projected Russian annual budget of approximately 415 billion dollars.

Gulf states challenge Russia in Asia

Moreover, Russia’s position in the Asian oil market is under threat. While Russia has been exporting discounted oil to countries like India and China, with the massive increase in production, other OPEC+ members are also targeting these markets, increasing competition and potentially driving prices even lower, while at the same time offering better quality oil compared to the Russians. This increased competition in Asia could erode Russia’s market share and further impact its oil revenues.

Russia’s influence within OPEC+ declines

Additionally, Russia’s influence within OPEC+ appears to be waning. The recent production increases have been driven primarily by Saudi Arabia, with Russia reportedly unhappy about these hikes. This shift suggests that Gulf states are increasingly dictating policy according to their own interests, potentially sidelining Russia in the decision-making process.

Sanctions, tariffs, and strikes cripple Moscow’s oil prospects

Russia is unlikely to benefit from increased production due to several factors. Tougher sanctions that get enforced more and more vigorously, price caps aimed to cripple the Russian oil revenue, and damaged refining capabilities, courtesy of Ukrainian precision strikes, limit Russia’s ability to capitalize on higher output. Furthermore, the production cost of Urals crude is higher compared to Brent Crude, as well as Brent having higher quality and being easier to refine into gasoline and diesel. There is also constant uncertainty about new sanctions coming soon, including a 500% secondary tariff being actively discussed in the US Senate, which would target countries buying oil and other natural resources from Russia. All this makes Russian oil less competitive in the global market and ruins all plans that have been made for the Russian budget, which is already under enough stress due to the ongoing war efforts in Ukraine.

In our regular frontline report, we pair up with the military blogger Reporting from Ukraine to keep you informed about what is happening on the battlefield in the Russo-Ukrainian war.