Oil, shipping, and supply chains: the widening fallout of the Iran war

Nikolay Patrushev, assistant to the president of the Russian Federation, has a stark assessment of the Iran war as it begins to ripple far beyond the Middle East. With shipping disrupted in the Strait of Hormuz, energy markets under strain, and maritime security deteriorating, the consequences are already being felt across global supply chains.

In an interview with Kommersant special correspondent Elena Chernenko, Patrushev outlines how the conflict is reshaping trade routes, testing alliances, and accelerating a broader reordering of the global economy.

Q: Kevin Hassett, the US president's economic adviser, recently announced that oil tankers are once again passing through the Strait of Hormuz. However, shipping volumes through the strait remain far below the levels seen prior to the US and Israel's war against Iran. What is your assessment of the situation in the region, particularly around the Strait of Hormuz?

Nikolay Patrushev:For years, the Strait of Hormuz has been a vital link in global supply chains, but these have now been largely disrupted. The area is becoming a zone of conflict, posing a danger to shipping. The current conflict appears ready to set back the established system of global trade and economic relations by years. Operation 'Epic Fury' has indeed become the catalyst for a reshuffling of the global energy market and the collapse of maritime logistics. There is nothing 'epic' about this 'fury', the world is instead witnessing a tragedy with unpredictable humanitarian and economic consequences. Oil and gas equipment has been damaged, the waters of the Persian Gulf have been severely polluted, port infrastructure has been destroyed, populations are suffering and cultural and historical treasures are being lost. Merchant ships from many different countries have been damaged or destroyed by the hostilities. Prices for energy resources, freight rates for the largest maritime container lines and insurance costs are rising. Global exports of fertilizers are declining, negatively impacting the agro-industrial complex in Asia, Africa, and Europe.

Q: Many Western politicians and experts claim that Russia is benefiting from the conflict because rising oil prices are boosting its economy.

Nikolay Patrushev:The conflict is not in the interests of either side. There is no justification or objective reason for it. For the US itself, it is destructive, as Americans are single-handedly destroying their status as a guarantor of security for allies around the world. Faith in the ability of Western military bases to ensure the security of the countries in which they are located is evaporating before our very eyes. Similarly, the belief that an alliance with America will save you from an economic crisis is also diminishing. Restrictions on energy supplies will inevitably lead to the closure of energy-intensive industries in Japan, South Korea, Australia, and European Union countries.

Yes, hydrocarbon prices are rising, but this will not continue indefinitely. Russia has developed close trade, economic, scientific and technical ties with each of the countries currently affected by the war over decades, including in the maritime sector. We are therefore following the unfolding events with great concern. We sincerely regret the completely unjustified loss of life, including members of Iran's senior leadership whom I knew personally. We mourn the civilian casualties in Iran and our friendly Gulf States, as well as the sailors from various nations who lost their lives. All of these casualties could have been avoided.

Q: Construction of the Rasht-Astara railway line, which is part of the North-South Corridor, was scheduled to start on April 1. What are the prospects for the project in the current climate?

Nikolay Patrushev:Iran is a strategic partner of Russia, and we are bound by long-standing friendship and fruitful cooperation. I am confident that the conflict will be resolved and that the Iranian people will continue to develop along their chosen path.

As for the North-South Corridor, it is by no means solely a Russian and Iranian project. Many other countries in the Middle East, South and South-East Asia, and Africa will benefit from its implementation. As the shortest route for delivering goods from Russia's European territories to India, it will boost trade turnover for dozens of states and promote the development of seaports and shipping companies. I believe this project has a future.

Q: The conflict surrounding Iran is drawing in an ever-increasing number of parties, and the fundamental principles of strategic balance at sea have been disrupted not only in the Persian Gulf, but also in the Mediterranean and the Indian Ocean. What are the implications of this?

Nikolay Patrushev:The conflict is already extending beyond the Persian Gulf. A striking example of this is the torpedoing of an Iranian frigate by an American submarine in the Indian Ocean. This is the first such incident since the Falklands War over 40 years ago. Notably, the Iranian vessel was unarmed and returning from the 'Milan' international naval exercise, where 51 countries had practised joint participation in humanitarian missions. Meanwhile, the US is distancing itself from the issue of shipping security in the Strait of Hormuz. Instead, the Americans have called on NATO members and other countries to send their fleets to the area, shifting the responsibility onto them. Despite their dependence on Washington, NATO countries are refraining from participating in military operations in this region.

Q: Well, European naval forces are continuing to hunt down the so-called Russian 'shadow fleet'.

Nikolay Patrushev:An unprecedented campaign has indeed been launched against fleets transporting cargo from Russian ports, involving powers that could be considered third-rate. In their pursuit of tankers, dry cargo ships, and container ships, some countries have gone too far.

The attack on the Russian LNG tanker 'Arctic Metagaz' in the Mediterranean Sea was an especially egregious incident that we regard as an act of international terrorism. According to the information available to us, the risk of terrorist and sabotage threats against vessels bound for Russian ports remains high. In this regard, we have developed and are implementing a comprehensive set of measures to ensure the safety of shipping.

Q: What does this entail?

Nikolay Patrushev:Inspections are being carried out on vessels arriving from abroad, and procedures have been established to coordinate operations between shipowners and seaport authorities. Controls have also been tightened on vessels transporting cargo on behalf of Russia. All information on maritime assets involved in economic activity is processed in real time to prevent surprise attacks on bases, ports, ships and vessels.

The possibility of requesting that Russian-flagged vessels be escorted by mobile fire support units via port captains is being considered. Plans are also being drawn up to deploy special protective equipment on vessels. It is also being considered whether the merchant fleet should be escorted by Navy vessels. We are noting an increasing trend of political, diplomatic and legal measures being ineffective in countering the campaign launched by the West against Russian shipping. Should new threats at sea emerge from European countries, additional measures will be developed.

Q: The American plan emphasizes the deployment of large-scale autonomous maritime systems and the production of low-cost unmanned surface and underwater platforms, in order to counter the numerical superiority of strategic rivals. Could the emergence of American fleets of such systems pose a threat to Russia?

Nikolay Patrushev:Many countries are paying attention to the deployment of robotic maritime systems because they believe that the traditional concept of naval force development no longer meets modern requirements. In India, for instance, work has recently begun on the country's first center for developing and producing advanced unmanned platforms for the navy and civilian fleet.

Autonomous, unmanned, remotely operated underwater vehicles are already in use in Russia, while research institutes and design bureaus are developing a new generation of this technology. In this field, our military research is keeping pace with, and in many respects surpassing, developments abroad. A current analysis of the domestic market aims to identify the most promising solutions for the creation of maritime drones. Attention is also being paid to small private companies, some of which have produced prototypes independently that are on a par with their foreign counterparts.

Q: Do you anticipate that Russia will have to defend its maritime trade for a long time to come?

Nikolay Patrushev:Western strategists have long understood that blocking a state's foreign trade operations is an effective way to inflict critical damage. It is therefore no coincidence that the US, the UK, France and several of their allies are seeking direct political, military and financial control over key maritime routes. Therefore, it is essential to ensure the security of maritime trade at all times. Above all, Russia must have its own capacity in the field of maritime freight transport, including a fleet, shipbuilding and repair enterprises, port facilities, operators and insurers. One of the most damaging misconceptions is the idea that a national merchant fleet is unnecessary and that dubious cost savings can be achieved by using a 'flag of convenience' to carry cargo. We must now build a maritime economy that is independent of imports. This does not mean that we are closing ourselves off from the outside world or refusing to cooperate with other major maritime powers. On the contrary, we will continue to integrate into the global maritime economy and cooperate with interested partners - but only on the basis of mutual benefit. However, this will only be on the basis of mutual benefit.

Q: The recently approved 'US Maritime Strategy' is essentially the first comprehensive US maritime doctrine in a long time. In your opinion, does it pose any risks to Russia?

Nikolay Patrushev:The document is certainly an interesting one, and we have studied it in detail. Of course, one could talk about certain risks, such as the more active expansion into the Arctic outlined in the plan, and the development of American polar shipping and infrastructure. However, I believe it is far more interesting to consider the overall tone of this doctrine and the lessons we might draw from it.

It is noteworthy that, from the very first months of its tenure, the Trump administration has set a course towards the systematic expansion of comprehensive maritime power. It is important to note that this refers not merely to the potential of naval forces, but to the full spectrum of capabilities in the sphere of maritime activities. The 'Action Plan' outlines objectives to achieve technological sovereignty in shipbuilding and related industries, ensure a stable inflow of affordable borrowed funds, develop coastal territories and create special economic zones. The plan promotes more responsible shipbuilding, including eliminating a vast number of bureaucratic procedures and endless changes and re-approval of design documentation, as well as introducing artificial intelligence into ship design. It is important to note that the modernization of US maritime sectors is largely envisaged to be achieved through strategic partnerships, particularly with Japan and the Republic of Korea, who are thriving in the shipbuilding sector. Incidentally, Seoul has already approved a $150 billion investment for US shipbuilding. The idea of creating state-backed mechanisms for raising borrowed funds is interesting. The American plan's logic is straightforward: to build a robust maritime economy, one requires inexpensive capital and substantial expertise, which necessitates a focus on education, advanced technologies, and production capacity.

Q: Could any of this be useful for Russia?

Nikolay Patrushev:Yes, many of the measures outlined by the Americans are also relevant to our country. In fact, a significant number of them have been in place at our shipyards and ports for several years now. The Maritime Collegium is currently preparing a draft federal law on shipbuilding which will incorporate many similar measures.

Q: March 19 is Submariner's Day in Russia and this year it coincides with the 120th anniversary of the submarine fleet.

Nikolay Patrushev:Submariner's Day commemorates the day in 1906 when submarines were officially recognized as a class of warship within the naval fleet. However, as early as the 19th century, the Proletarsky Shipyard conducted trials of the world's first all-metal submarine, which was designed by the exceptional engineer Karl Schilder. This year also marks the 240th anniversary of his birth.

In the early 2000s, I visited military towns near submarine bases in Kamchatka, Primorye, and Murmansk Region. Desolation and despondency is what I saw in the places where submariners lived with their families. Meanwhile, Western advisers were inciting liberals in the government's economic bloc to scrap the submarine fleet altogether. Thanks to the head of state's decisions, however, the submarine fleet was preserved and expanded. The president of the Russian Federation, Vladimir Putin, pays particular attention to shipbuilding science, engineering education, and social protection for military families. Housing construction has resumed, and new cultural and sports facilities, schools and nurseries have been built.

The professionalism and combat training of Russian submariners, combined with state-of-the-art equipment, make the Russian Navy one of the most powerful in the world today. Special tribute should be paid to the achievements of the Sevmash shipyard, the Admiralty Shipyards, the Zvezdochka ship repair enterprise and the Rubin, Malachite and Krylov Scientific Centers. True patriots of the submarine fleet work in design bureaus and shipyards, serving at sea and on shore alike. This includes the families who support the submariners, young boys who romanticize naval service and dream of joining, and of course the Navy veterans, whose devotion to the Motherland sets an example for the next generation of officers and sailors. I offer my heartfelt congratulations on this holiday.

This article was first published byKommersant, and was translated and edited by the RT team.

(RT.com)