Russia's $1.9 Billion Jackpot: How the Strait of Hormuz Closure Is Filling Moscow's War Chest

As Iran chokes the world's most critical oil passage, Russia is quietly cashing in — and the money is flowing straight into a war economy.

When US and Israeli warplanes began striking Iran on February 28, the immediate world attention fixed on explosions over Tehran, the death of Supreme Leader Khamenei, and the closure of the Strait of Hormuz. What went largely unnoticed was a quieter development unfolding thousands of kilometres away — in Moscow's finance ministry, where tax revenues from oil exports began climbing sharply.

Russia has earned an estimated windfall of between $1.3 billion and $1.9 billion in additional tax revenues from oil exports since the Strait of Hormuz effectively closed, as India and China — the world's two largest buyers of discounted Russian crude — scrambled to lock in alternative supplies and increased their purchases from Moscow.

The Mechanism: How Hormuz Closure Profits Moscow

The logic is straightforward. The Strait of Hormuz normally carries 20% of the world's oil supply. When Iran shut it down, the countries most dependent on Gulf oil — particularly India and China — faced an immediate supply gap. They needed oil from somewhere. Russia, already selling heavily discounted crude to both countries under Western sanctions, suddenly became even more attractive as a reliable, accessible alternative.

As demand for Russian oil surged, so did the price Moscow could command. Higher prices multiplied by higher volumes equals a significantly larger tax base — and Russia's government takes a direct cut of every barrel exported through export duties and mineral extraction taxes.

The result: a $1.3 to $1.9 billion boost to the Kremlin's coffers — money that feeds directly into a wartime budget already stretched by the ongoing conflict in Ukraine.

India and China: The Willing Buyers

India had already become Russia's largest single buyer of discounted crude following the 2022 Ukraine invasion, replacing European customers who cut ties with Moscow. When Gulf supplies tightened after the Hormuz closure, Indian refiners had every incentive to double down on Russian purchases — the price was right, the supply was available, and the shipping routes through the Arabian Sea were unaffected by the Iran war.

China followed the same calculation. Beijing has been receiving Iranian oil directly — some 11.7 million barrels since February 28 — but as Iranian export capacity came under pressure from US strikes, Chinese refiners quietly increased Russian crude imports as a hedge against further supply disruption.

Both countries have consistently refused to join Western sanctions against Russia. The Iran war has now handed them a practical reason to deepen those ties further.

The Bitter Irony for Washington

There is a sharp contradiction at the heart of this picture that Washington has yet to publicly address. The United States launched military strikes on Iran partly to degrade its ability to threaten global energy supplies. But the immediate consequence of those strikes — the Hormuz closure — has driven up global oil demand for the one country America most wants to economically isolate.

Every additional dollar Russia earns from oil exports is a dollar available to sustain its military operations in Ukraine, where American weapons and funding are simultaneously supporting the other side. The war in Iran is, in effect, subsidising the war in Ukraine — through the crude oil markets.

What This Means for Pakistan

For Pakistan, the Russia windfall story carries a painful domestic dimension. Islamabad has been quietly exploring discounted Russian crude imports since 2022, with limited success due to sanctions fears, payment mechanism complications, and refinery compatibility issues.

Now, as oil prices spike above $100 a barrel on global markets and Pakistan's petrol price hits Rs321 per litre following a Rs55 single-day hike, the countries that did normalise Russian oil trade — India chief among them — are cushioned by cheaper import costs that Pakistan cannot access.

India pays less for Russian oil. Pakistan pays market rates. Both countries share a border, a region, and the same oil crisis — but are experiencing it very differently.

The Bigger Picture

The Hormuz closure was supposed to hurt Iran's enemies. And it has — oil prices have spiked, global shipping is in chaos, and Western economies are absorbing the inflationary shock. But wars rarely hurt only the intended targets.

Russia, sitting outside the conflict entirely, has collected over a billion dollars simply by being the most available alternative to Gulf oil at the moment the Gulf stopped supplying it. For Moscow, the Iran war is not a crisis. It is a revenue opportunity — and so far, it is working exactly as the Kremlin would have hoped.

— ISN Global News