Russia emerges a winner in Iran war, while Ukraine and Germany come under greater pressure

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BERLIN – While global attention is fixed on the skies over Tehran, the most consequential beneficiary of the US-Israeli strikes on Iran may not be in the Middle East at all. 

The Iran war has handed Russian President Vladimir Putin a strategic windfall he could not have arranged better himself: an oil price spike filling Russia’s war chest.

But the money is only half of the story.

The United States is distracted, and Ukraine is running out of the missiles it needs to survive, particularly the US-supplied PAC-3 Patriot interceptor missiles that it relies on to defend its energy and military infrastructure from Russian ballistic missiles.

“So far, there is only one winner in this war – Russia,” European Council president Antonio Costa said on March 10 in a speech to European Union ambassadors in Brussels.

“It gains new resources to finance its war against Ukraine as energy prices rise. It profits from the diversion of military capabilities that could otherwise have been sent to support Ukraine. And it benefits from reduced attention to the Ukrainian front as the conflict in the Middle East takes centre stage.”

Mr Costa added: “We know the new reality: A reality in which Russia violates peace, China disrupts trade, and the United States challenges the international rules-based order.

“We must avoid further escalation. Such a path threatens the Middle East, Europe and beyond.”

For anyone in Berlin hoping that Germany – the world’s third-largest economy after the US and China – might “step up” to fill the looming American void in Europe’s defence security, the reality is grim.

Germany is currently struggling with its own energy crisis, sparked by the very same Gulf conflict that is effectively bankrolling the Russian war machine.

Still, German Chancellor Friedrich Merz said at a news conference in Berlin on March 10 that solidarity with Ukraine took precedence, even if it meant enduring higher energy prices for a period.

For most of 2025, the Russian federal budget was under severe pressure. The Kremlin had tentatively budgeted for its crude to sell at approximately US$60 a barrel. Throughout early 2026, Moscow had trouble even hitting that target and was forced to offer double-digit discounts to buyers in India and China to keep selling.

The Iran war turned out to be a big game-changer.

Before the first US-Israeli strike on Iran on Feb 28, Russian oil was selling at a massive discount compared with world markets. Today, it is selling at a premium.

With Brent crude standing at around US$100 per barrel following the de facto closure of the Strait of Hormuz, Moscow is receiving a cash injection that is undoing years of Western sanctions in a matter of weeks.

European governments spent most of 2024 and 2025 carefully building an “oil price cap” meant to starve Mr Putin’s military. Now, a Middle Eastern conflict they did not want but cannot stop has blown a hole in the calculus. Each dollar the conflict adds to the price of oil is a dollar moved from the West’s sanctions column straight into Russia’s coffers.

As if that is not enough, the Trump administration has begun to ease some restrictions on Russian oil exports that were designed to pressure Russia over its invasion of Ukraine, in an attempt to cushion the shock in energy markets caused by the Iran war.

Yet, Moscow appears to be repaying Washington’s leniency by lending support to the US’ current adversary.

The Wall Street Journal recently reported that Russia is sharing critical satellite imagery and intelligence to help Iran pinpoint the locations of US and Israeli military forces in the Middle East.

According to US officials cited by the Journal, this cooperation has significantly enhanced the precision of Iranian missile strikes against regional radars and command facilities during the current conflict. The Kremlin officially denies these claims, and the Trump administration has publicly downplayed the impact.

Is Ukraine still Trump’s high priority?

As the US dumps enormous amounts of its air defence inventory into the Middle East, a military crisis is unfolding in parallel for Ukraine.

In just the opening phase of the conflict, the US expended more than 800 Patriot interceptor missiles defending Gulf allies. That is more missiles than Ukraine received during the entire previous year of fighting.

Considering the US produces only about 600 of these interceptors annually, Washington has essentially burned through more than a year’s worth of production in a single week.

They have become a critically undersupplied resource to Ukraine, which needs them to intercept the ballistic missiles that Russia is constantly firing at its power grid.

Ukraine is no longer the top priority, although US President Donald Trump reassured visiting Chancellor Merz on March 3 that negotiating a deal to end the war between Russia and Ukraine remained “very high” on his priority list.

Mr Trump also said he believed the US had plenty of munitions to fight Iran as well as sell to Europe for use in Ukraine.

Meanwhile, the hope that a war in Iran would at least stop the flow of Iranian-designed Shahed drones to the Russian front has also proven to be wishful thinking.

Russia is already building the Shahed domestically under an Iranian licence in its own factories, like the one near the town of Yelabuga in the central region of Tatarstan. Production has been ramped up to the point where the Russians no longer need Tehran to ship them finished units.

What does this mean for Berlin?

The Gulf conflict that is making Russia rich is putting tremendous pressure on the energy-intensive German economy.

Can Germany fill the gap left by an America that is clearly stretched by two wars? The answer, increasingly, is “no”. This, despite Mr Merz’s pledge to build Europe’s strongest army and the warning by his Chief of Defence, General Carsten Breuer, that NATO should prepare for a possible Russian attack – possibly as early as 2029.

The closure of the Strait of Hormuz has sent energy costs surging across Europe. Germany is particularly exposed. After cutting itself off from Russian gas following Moscow’s 2022 invasion of Ukraine, Berlin built a new reliance on Qatari liquefied natural gas, going as far as constructing import terminals on the North Sea coast to handle the supplies. But with supplies disrupted, the terminals are forced to operate at significantly diminished capacities.

There is also another potential disruptor waiting in the wings: Qatar produces roughly 40 per cent of the world’s helium. Helium is essential for the production of semiconductors and cannot be substituted. With a shortage of this raw material for semiconductors, the automotive sector – one of the backbones of the German economy – will be in deep trouble.

Economists project that a prolonged conflict in the Middle East could add between 1 and 1.5 percentage points to German inflation by the year end, erasing the modest deflationary relief that had only just arrived.

None of this helps Mr Merz in taking up the desired leadership role in Europe as he tries to manage a domestic inflation shock, somehow fund a military build-up, and not cut too deep into social benefits – all at once.