Russian oil is becoming more expensive than Brent. What does this mean in the context of Trump’s latest statements on Hormuz?
Because of the situation in the Strait of Hormuz, India has begun buying Russian oil not at a discount, as it did previously, but at a small premium.
The main reason is that even at this price, Russian oil remains more attractive to Indian refiners. The closure of Hormuz is changing the dynamics of the global oil market. And Trump’s statement that the Strait of Hormuz is American territory suggests that we should not expect any quick resolution of the situation there.
I am writing this specifically for those who insist that the Russian economy is about to collapse any day now. Unfortunately, the war in Iran is allowing Russia to keep its macro-finances broadly balanced. Yes, Russia will have a large budget deficit in 2026 — around 7 trillion rubles, unless the authorities resort to controlled inflation. If they launch another mobilisation, the deficit could reach 8 trillion rubles. But Russia does not have substantial foreign-currency debt. So this is painful, but not critical.
But let us return to Hormuz. Trump’s statement is not simply another provocative remark. It serves several important purposes. The main one is an attempt to put pressure on China ahead of the Trump–Xi talks.
The United States does not have the ability to win the war in Iran militarily. But it still has the ability to impose secondary sanctions and make life more difficult for China. Judging by the current trajectory, this appears to be Trump’s main bargaining chip ahead of the upcoming negotiations, and this is how he will try to raise the stakes. Whether this leverage will work is another question. But this is clearly the direction in which he is moving.
In theory, the Ukrainian issue could also be raised during the Trump–Xi negotiations, particularly in the context of the closed Black Sea. Unfortunately, however, the Ukrainian side currently has no position specifically prepared for these talks and does not appear to be developing one.
As before the previous meeting between the Chinese and US leaders, we are relying on the hope that someone will say something about us. And that is a losing position from the outset.
