Russia’s stock market has shrugged off the outbreak of war in the Middle East with stocks of the leading oil companies ending in the green on March 2.

Russian energy producers led the gains on Moscow Exchange (MOEX) as oil prices briefly climbed above $80 a barrel amid heightened tensions in the Middle East.

The MOEX Russia Index rose 1.3% to 2,835.65 points, according to Moscow Exchange data, reports TASS, reaching its highest level since the start of the year. The dollar-denominated RTS Index gained 1.44% to 1,157.51 points. The Chinese yuan edged up by two kopecks to RUB11.22 against the rouble.

“The MOEX Russia Index started the week with the rise to 2,850 points and updated the top since the year started. Heavyweight oil and gas companies expectedly acted as beneficiaries of the Middle Eastern destabilization, along with gold miners. Oil prices spiked above $80 [per barrel] but prices retreated a little then,” said Alexander Shepelev of BCS Investment World.

MOEX performance showed the resilience of the market but the index remained below its last high when it briefly broke through the 3,000 market in November 2019 during the last boom, before the war in Ukraine broke out.

Hostilities in the Middle East drove Brent crude above the $80 mark during intraday trading as investors weighed the risk of supply disruptions in a region central to global energy exports. Prices later pared gains, but energy-linked stocks on the Moscow Exchange retained strong momentum.

“Growth leaders were securities of Bashneft (+10.89%), Tatneft (+10.77%), Russneft (+10.04%), and preferred stocks of Tatneft (+8.82%) and Rosneft securities (+8.33%),” said Dmitry Lozovoi of Finam. Shares in Positive Technologies fell the most, dropping 4.74%, he added.

Russia’s oil and gas sector, which accounts for a fifth of the federal budget revenues and market capitalization, remains particularly sensitive to global crude price fluctuations. Higher oil prices typically support the ruble and boost export earnings. Russia was facing a large budget deficit this year that the Ministry of Finance (MinFin) will struggle to fund, but elevated oil prices will make that job a lot easier. The 2026 budget predicts a deficit of 1.6% of GDP and assumes average oil prices of $60 per barrel. MinFin was contemplating cutting the forecast oil price to $45-$50, but if the war in Iran lasts longer analysts are predicting oil prices will be significantly higher.

Analysts expect volatility to persist in the near term. BCS Investment World forecasts the MOEX Russia Index to trade in a corridor of 2,775 to 2,875 points on March 3, while Freedom Finance Global predicts movement in the 2,750 to 2,850 range.

Gas stocks get a bump

Gas stocks are also getting a bump. Qatari has suspended its LNG deliveries through Hormuz, which primarily goes to Asia (82% of QatarEnergy's customers are Asian companies). If Qatari gas is unavailable, Asian buyers—India, which relies on Qatar for 45%, and China 30% -- have to enter the spot market and compete with Europe for the remaining volumes. The LNG business is still immature and without Russia’s supplies to Europe there is simply not enough international LNG to go around.

If Asia starts competing with Europe for US LNG then Goldman Sachs warned that a month-long halt to shipping through the Strait of Hormuz could raise European gas prices by 130%. If the disruptions last longer than two months, prices could exceed €100 per MWh—a level that would trigger massive demand destruction comparable to the 2022 energy crisis which saw gas prices rise as high as €350, The Bell reports.

The potential volume of lost supply exceeds the Russian gas shock of 2022, according to the FT. At that time, Russia reduced supplies by approximately 80bn cubic meters per year. Analysts estimate the total volume of gas potentially affected by the current crisis—from Qatar, the UAE, and Israeli fields—at 120bn cubic meters or more.

Russia would be a big winner from a both an oil and gas crisis. Russian gas could be redirected to countries that previously purchased Qatari gas.

Russian gas stocks are already reacting: according to analysts, cited by RBC, the main beneficiaries on the Moscow Exchange appear to be Gazprom (up 1.7% on March 2) and NOVATEK (up 5.1%).