Conditions for US-Russia Rapprochement Fall Into Place
The Iran war may give both a reason to compromise.
By: Ekaterina Zolotova
Seven months after the historic Alaska summit between Russia and the United States, the time may finally be right for a rapprochement.
In a frenzy to boost oil supplies with the all-important Strait of Hormuz effectively blockaded by Iran, last week the U.S. issued a 30-day waiver for the sale of sanctioned Russian oil and petroleum products stranded at sea – amounting to approximately 100 million barrels.
Lifted by that news, as well as a narrowing of the discount on Urals crude, Russia exported 3.44 million barrels per day in the four weeks ending March 15 – an increase of about 90,000 barrels per day compared with the period to March 8.
With Washington’s attention having narrowed to war with Iran and the global oil supply, Moscow finds itself with an opportunity to cut some bilateral economic deals without needing to make concessions to end the war in Ukraine.
Common Ground
The most notable difference from last August’s meeting in Anchorage is that the U.S. is suddenly worried about imminent economic pain as a result of rapidly rising energy prices.
Before, Moscow had little to offer Washington directly besides the prestige of brokering a ceasefire in Ukraine, but now the White House wants the Kremlin’s support to bring down oil prices before domestic inflation surges.
In exchange for sanctions relief, Russia is ready to help.
Among countries outside the Middle East, only the U.S. produces more oil than Russia.
The Ministry of Economic Development already plans a 1.8 percent increase in production in 2026, followed by another 1.4 percent increase in 2027.
Additionally, Russia is capable of increasing supplies of natural gas and fertilizers, both of which have also been disrupted by the Iran war.
For a faster surge in oil production, however, Russia would require two things.
First, the U.S. would need to lift some sanctions on related Russian industries to enable access to more financing.
Second, U.S. oil and gas companies would need to return to the Russian market, along with their investment and technological expertise.
Russian President Vladimir Putin already laid all this out on the eve of the Alaska summit with a decree outlining the conditions for returning ExxonMobil's stake in the Sakhalin-1 oil and gas project, which Russia effectively took over from the U.S. company in 2022.
The second major change easing U.S.-Russia negotiations is the sidelining of the Ukraine issue.
The last round of trilateral talks took place in Geneva in mid-February, and the next meeting was supposed to occur March 5 in Abu Dhabi but was postponed due to the U.S.-Israeli strikes on Iran.
However, according to Russia’s presidential press secretary, the bilateral economic dialogue between Moscow and Washington is still ongoing.
Frustrated with the lack of progress toward ending the Russia-Ukraine war, the White House seems content to step back and treat it as a local conflict that weakens both Russia and Europe.
Adding to Washington’s irritation, Europe this week declined to send warships to help reopen the Strait of Hormuz, prompting President Donald Trump to suggest that the U.S. does not need to help Europe in Ukraine, which is “thousands of miles away” from U.S. territory.
For the U.S., with Ukraine at least momentarily out of the way, sanctions waivers for Russian oil and other potential sanctions relief (such as medicines and civil aviation) are a small price to pay for lower energy prices.
The picture for Russia would not be significantly changed.
Remaining sanctions, particularly European sanctions, would continue to weigh on Russian banks and companies.
Moscow’s ability to replenish its treasury from energy sales would not substantially improve and would remain dependent on decisions made in Washington.
Its fleet of oil and gas tankers would still be vulnerable to sanctions and sabotage, particularly as they navigate narrow waterways around the Black and Baltic seas.
Perhaps most important, the war in Ukraine would still be draining Russian resources.
On one hand, the Russian economy has grown increasingly dependent on its military industry.
A painful transition likely lies ahead when the conflict ends.
On the other hand, war is expensive, and Ukraine’s capacity to strike targets inside Russia is only growing.
Sergei Shoigu, secretary of Russia’s Security Council, recently warned that no region was immune to the threat of drone attacks.
What About Iran?
In exchange for partial sanctions relief, Washington may want Moscow’s help with one other pressing issue: Iran.
U.S. media such as the Washington Post and Wall Street Journal have reported that Russia is providing Iran with intelligence to help it strike U.S. and allied military installations and supplying advanced drone technology.
However, Washington is dubious about these reports, primarily because the Ukraine war leaves Moscow with few weapons to spare, and what’s left is unlikely to tip the balance of power.
In this way, the continuation of the Russia-Ukraine war is arguably beneficial for the United States.
If the U.S. presses, Russia is unlikely to make much of a fuss about Iran.
It’s true that the two countries signed a comprehensive strategy partnership treaty barely a year ago, but nothing in the agreement obligates Moscow to participate in military operations on Tehran’s behalf.
The treaty only prohibits Russia from providing military or other assistance to the aggressor.
Additionally, Russia does not want to see a strong Iran, nor does it want a larger conflict that might send millions of refugees into the Caucasus, potentially destabilizing southern Russia.
For Moscow, whatever economic relief it can squeeze out of Washington is more important than helping Tehran.
(Even if it could negotiate peace with Ukraine, the Kremlin has no expectation that Europe would immediately lift sanctions.)
As a result of high taxes and the persistently high key interest rate, Russia is seeing growing numbers of small business closures and mortgage delinquencies.
Meanwhile, rising prices and restrictions on the use of apps and communications are fueling public anger.
The formula for cooperation between Washington and Moscow is simple.
With the Strait of Hormuz effectively blocked and the Ukraine war sidelined, the U.S. has the need and opportunity to allow more Russian oil sales and to selectively return to the Russian market, without strengthening Russia.
Moscow has the opportunity to offset some economic losses and gain access to technology and finance that it has been unable to replace during years of sanctions, and without which the economy is beginning to suffocate.
Under these circumstances, the U.S. waiver on Russian oil could be the opening move in broader bilateral economic negotiations.
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