Moscow, Russia—Could U.S. sanctions be benefiting the Russian economy instead of hurting it?
President Trump’s recent decision to impose yet another wave of sanctions on Iran over its nuclear program has Russian energy oligarchs and government officials rubbing their hands with pleasure. This new wave of sanctions is scheduled for early November. Iran and Russia are traditional allies, their alliance enhanced by sharing a common adversary (the U.S.).
The sanctions against Iran’s petroleum industry would translate into a price spike due to the concomitant shortfall in production. Saudi Arabia, however, has taken the lead and announced that it would pump more oil to maintain production, and thus price, levels. And it wasn’t alone. Russia has responded similarly. However ironic it may sound, Russia has increased its oil production in response to President Trump’s call for more oil to keep prices low.
Currently, the four largest Russian energy companies (Rosneft, Gazprom, Lukoil, and Novatek), which account for the majority of the country’s oil and natural gas output, have reached historical record level highs in production. And high production equates to high stock market value. Gazprom’s stock, for instance, has increased by 1/5 since the announcement of sanctions.