Oil Trade and Evolving Russia-Middle East Ties during the War in Ukraine

In addition to exercising its leverage, however, Moscow has also been pursuing a longer-term grand strategic game in the Middle East. The MENA region plays a role in both Russia’s “Maritime Doctrine” (July 2022) and its “Foreign Policy Concept” (March 2023).[viii] Illustrating the significance of the region for strategic calculations is the fact that since the outbreak of the war, President Vladimir Putin has only visited Middle Eastern countries outside of the former Soviet area: Tehran in July 2022, and Abu Dhabi and Riyadh in December 2023.[ix] As there is no overtly anti-Russian government present in the Middle East, Russia has looked towards solidifying its partnerships with the region. A strong element of this approach is an outspoken anti-West stance, which at the same time keeps reminding regional leaders to avoid becoming entangled in the West’s sanctions quagmire. On the flip side, Middle Eastern capitals’ relations with Russia can potentially strengthen their bargaining ability vis-à-vis Western partners in the future.[x] Multiple regional powers are likely to join BRICS and the Shanghai Cooperation Organisation (SCO) in the coming years. Iran, Egypt, and the UAE are already members of BRICS since January 2024, whilst Saudi Arabia, Bahrain, Qatar, the UAE, Kuwait, and Türkiye are dialogue partners of the SCO.[xi] Turkish President Recep Tayyip Erdoğan stated at a NATO summit that Türkiye aimed to join the Shanghai Five,[xii] and become a permanent member of the grouping.

Russia’s strategic desire to improve relations with the Middle East dates back to the collapse of the Soviet Union in 1989-91.[xiii] While the Cold War ended, Russia’s anti-Western approach did not, and the Middle East turned out to be a region potent with opportunities to build influence. All tumultuous events in the region since 2000, including the Iraq war, the Arab Spring, the civil war in Syria, Libya and Yemen, and the most recent war between Israel and Hamas were utilised by Russia to foster public opinion against the US and its allies, painting a picture that the Atlantic alliance only brings catastrophe to the region. Western countries’ own strategic miscalculations and their detrimental effects meant that Putin’s anti-Western rhetoric to found fertile ground.

Apart from diplomatic initiatives, Russia also emerged as a significant arms supplier for Iran, Syria, Iraq, Egypt, and Algeria.[xiv] To reciprocate, Tehran provided Moscow with drones and arms since 2022 for the latter’s war in Ukraine.[xv] Apart from bilateral talks and official state visits, Russia held a Joint Ministerial Meeting for Strategic Dialogue with GCC member states in Moscow in July 2023 to deepen existing energy, trade, and investment relations with the group.[xvi]

In individual cases, fostering good relations with Russia proved important for multiple countries in the region. Moscow also recognises the opportunities these instances of tit-for-tat provide in the context of its long-term strategy. For example, despite being close allies of both countries, Russia sided with the UAE over the islands it disputed with Iran in the Persian Gulf[xvii] [xviii] In another example, Türkiye’s balancing policy condemned Russia’s invasion of Ukraine but refused to introduce sanctions. Ankara sent Bayraktar TB2 drones to Ukraine but at the same time bought cheaper Russian oil and gas. Erdogan negotiated with Putin as part of the grain deal but he closed the Turkish straits to Russian warships as per Article 19 of the Montreux Convention.[xix]

After the US’ carte blanche approach to Israel in its war with Hamas, Russia tried to focalise public opinion against it in the hope that that global support to Ukraine would also be diverted to an extent as a result. Moscow did not classify Hamas as a terrorist group but restricted its linkage with the organisation’s political branch.[xx] In its relations with Israel, Russia has portrayed itself as a great power against Israel’s military operations, whilst it neglected Israel’s hitting of Iranian targets in Syria as part of an ongoing agreement between Netanyahu and Putin.

Business first

Beyond the most immediate concerns of food security in the context of the war, an ‘impartial’ policy approach gave way to notable benefits in oil trading and investment relationships with Russia.[xxi]

While European states, the US, Japan, and South Korea cut down Russian oil imports, Türkiye, India, and China were amongst the top countries that bought discounted Russian crude.[xxii] As CREA reports, Russian crude oil exports to Europe, as of July 10, 2024, decreased to 146.17 thousand tonnes per day (ktpd) from 944,75 ktpd, on the day of the invasion.[xxiii] Türkiye doubled its oil import from Russia, increasing the share of its monthly crude imports from Russia to 11.65%[xxiv] compared to a mere 1.89% before the war.[xxv] One other aspect of the oil war between the West and Russia is the oil price cap since December 2022, restricting G7 member states and their allies to provide service to maritime firms that carry Russian crude if the oil is priced above $60/b.[xxvi]

According to the S&P Global Commodities at Sea report, tankers that are not flagged, owned, operated, or insured by the companies of the countries imposing price cap (G7, the EU, Australia, Switzerland, and Norway) facilitated 82.5% of Russian crude exports in June 2024.[xxvii] UAE-owned tankers filled the gap of Greek ships, and have supported Russian seaborne crude exports. Russian crude that arrived to the UAE’s port of Fujairah has been re-exported to different regions of the world.[xxviii] [xxix]

Saudi Arabia and the UAE have also imported Russian crude and refined petroleum products to supply their domestic consumption, which allowed them to export their own crude oil at relatively high prices in turn.[xxx] This opportunity emerged from the fact that the Russian Urals medium sour grade with 1.7% sulfur content has a similar quality as Middle Eastern grades, including Saudi Arabia’s oil (Arab Light, Arab Medium, and Arab Heavy), Iraq’s Basrah Medium, and Iran’s Heavy.[xxxi]

Following US President Joe Biden’s visit to Saudi Arabia in July 2022, and the ‘Strategic partnership with the Gulf’ deal between the EU and Gulf states, it was expected that Saudi Arabia and the UAE would curb hiking oil prices by increasing production quotas so that Russian oil export revenues would be damaged further, avoiding their use for the purposes of the war. However, OPEC+ rebuffed.[xxxii] Despite the Biden’s Administration’s policy to “not leave a vacuum to be filled by China, Russia, or Iran”[xxxiii], Russia’s influence in the Middle East and close cooperation with regional powers seems to have achieved just that. Furthermore, despite the slump of oil prices in 2023, Russian profits and the country’s economic stability appear to hold.[xxxiv]

What Comes Next?

While the US has a strict security partnership with its allies in the region—which perceived Russian encroachments do not and cannot threaten—Russia’s proliferating ties might still cause headache to policymakers in Washington. Rapprochement talks between Damascus and Ankara, for instance, reveal the strong motives of Russian officials to de-escalate tensions between its respective allies. In addition to ongoing diplomatic talks, Russia is also constructing nuclear power plants in Iran, Türkiye and Egypt.[xxxv] Russian Lukoil has a contract in the West Qurna-2 oilfield of Iraq’s state-owned Basrah Oil Company.[xxxvi] Egyptian waters are also rumoured to serve as a hub for tanker-to-tanker transfers of Russian crude.[xxxvii] Regional states tend to trade with Russia in local currencies, providing further incentives to them.[xxxviii] According to a polling survey, people in Egypt (57%), Bahrain (68%), Qatar (63%), and Lebanon (72%) believe that Russia and China could be viable alternative partners to the US.[xxxix]

It is clear that President Biden could not address the concerns of multiple regional allies adequately during his tenure. With the US elections approaching, a second Trump presidency—with Trump known for his more pro-active but, on certain points, highly controversial approach to regional issues, as well as vis-à-vis Putin and Russia—could bring about a more stern US stance that demands loyalty from Middle Eastern countries. Such loyalty would, however, be directed against China primarily and not Russia. On the other hand, the complex policy interactions between the Ukraine war and regional alliances could further solidify Russia’s foothold in the region.