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Barrels of Disappointment: How OPEC+’s Output Surge Burns Iran and Russia

June 1, 2025 By Analysis.org

So much for the grand petro-state chessboard. Just as Iran and Russia were counting on oil markets to rescue their beleaguered economies, OPEC+ has decided to twist the knife—with a smile. The cartel’s announcement that it will boost production by another 411,000 barrels per day in July—the third consecutive monthly increase—is not just a logistical move. It is a calculated gesture, and it hits Moscow and Tehran right where it hurts: the wallet. The increase reinforces a wider strategy of market normalization, one that has pushed oil prices to their lowest level in four years and erased the illusion that geopolitics can permanently inflate crude valuations.

The effect is especially cruel for Russia. With its economy already hemmed in by Western sanctions, a costly war in Ukraine, and increasing dependency on Chinese demand, Russia desperately needs higher oil revenues to keep its military and its domestic obligations afloat. But crude is now flirting with levels not seen since the pandemic collapse, and Moscow’s budget projections are evaporating faster than a Siberian puddle in August. Discounts on Russian crude—already steep due to the sanctions—are now even less meaningful when the baseline price is in freefall. The Kremlin can no longer pretend that BRICS will save it, or that rerouting oil to Asia would offset its lost European markets. When even India starts to rethink the bargain, you know the margins have turned toxic.

Iran, meanwhile, is finding little comfort in the cartel it once helped shape. Sanctioned, isolated, and increasingly reliant on shadow exports and murky shipping arrangements, Tehran has benefited from price spikes caused by conflict and uncertainty. But a stable, oversupplied market is its worst-case scenario. It undermines Iran’s already fragile export network and reduces the revenue it can extract from its limited, under-the-radar sales. Even its diplomatic overtures to Gulf states and cautious hedging between China and the West won’t help much if oil prices don’t cooperate. No matter how many tankers slip through the Strait of Hormuz unnoticed, what they carry is now worth significantly less.

What’s deliciously ironic is that OPEC+, the very forum both nations saw as a lever against the West, is now behaving more like a technocratic body determined to restore market equilibrium than a geopolitical weapon. Led by Saudi Arabia and backed by the UAE, the bloc seems more interested in defending market share, taming inflation, and staying on Washington’s good side than engaging in price theatrics to assist pariahs. Riyadh, no stranger to its own self-interest, has clearly recalibrated its position. It would rather boost volume and keep global markets calm than see oil flirt with $100 again and provoke the wrath of consumers and central banks alike. That doesn’t leave much room for solidarity with its OPEC “friends.”

There is, of course, poetic justice in watching two revisionist regimes—each clinging to hydrocarbons as the last remaining pillar of strategic relevance—brought low not by direct confrontation, but by an indifferent market. Oil may still fuel tanks, but it no longer funds empires. And as prices sag and revenues dwindle, the limitations of energy blackmail and fossil diplomacy come into sharper relief. Iran and Russia aren’t just being punished by sanctions or Western resolve—they are being outmaneuvered by the very dynamics they thought they could control.

Call it economics. Call it karma. Or just call it what it is: schadenfreude served by the barrel.

Filed Under: Briefing

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