Russia can gain from Middle East turmoil — but it could backfire if the war spirals out of control

Russia’s response to this week’s violence in Israel and Gaza has been conspicuously muted as it weighs up its competing alliances and interests in the region.

Moscow did not openly condemn the violence meted out on Israel last weekend by Palestinian militant group Hamas, which is backed by its ally Iran, but was wary to alienate its Israeli partners too. Instead, its foreign ministry called on all sides to renounce violence, exercise restraint and implement a cease-fire, warning of a potentially very dangerous escalation.

Russia stands to benefit from turmoil in a number of ways, analysts say, given the distraction from its own war in Ukraine, oil exporting status and potential to mediate between disparate parties in the region.

But it could also easily be dragged into a potentially extremely deadly, wider conflict that forces it to pick sides and sees its influence, interests and assets damaged in the Middle East.

Since that statement from Russia’s foreign ministry last weekend, the conflict has dramatically escalated with Israel’s relentless airstrikes destroying whole neighborhoods in the Gaza Strip, displacing and trapping hundreds of thousands of Palestinian civilians, and increasing the likelihood that Israel’s enemies in neighboring Lebanon, Syria and Iran could enter the theater of war too.

“Russia benefits from a localized and protracted conflict between Israel and Hamas that’s confined to Gaza, but if the conflict yet opens up in multiple other fronts [like] Syria or Iraq or Lebanon, then it could become a very problematic development for the Russians,” Samuel Ramani, a geopolitical analyst and associate fellow at the Royal United Services Institute think tank, told CNBC.

“So this is a very, very nervous moment for Moscow. It could present an opportunity for them but also could present a very, very disastrous outcome for their influence in the Middle East too if the conflict spirals out of control,” Ramani said. CNBC has requested a comment from the Kremlin and is awaiting a response.

One of the most obvious ways that the Israeli-Hamas war helps Russia is that it distracts and dilutes Western focus on Ukraine. The timing couldn’t be better for Russia in a way, with a creeping sense that public support for continued funding for Ukraine, and patience with the 19-month war, is declining.

Analysts also believe Russia will use the war in Israel and Gaza to sow disinformation about Ukraine and discord among its allies.

War in the Middle East “distracts the attention of Ukraine’s key partners from Russia’s invasion at a time when fatigue with the conflict in Ukraine was already setting in the West, and continued U.S. support for Ukraine is engulfed in uncertainty,” Andrius Tursa, central and eastern Europe advisor at Teneo risk consultancy, said in a note Wednesday.

“If fighting between Hamas and Israel expands or becomes prolonged, questions about the U.S.’s capacity to provide military support to Ukraine and Israel will grow.”

Even before the latest flare-up of violence between Israel and Hamas, there were signs that ongoing and future funding for Ukraine could be in jeopardy, particularly after U.S. Congress agreed a stopgap funding bill that paused additional aid for Ukraine for 45 days.

Ukraine’s President Volodymy Zelenskyy met NATO and allied officials in Brussels Wednesday and was apparently reassured of their continuing commitment to support Ukraine. Still, potential political shifts in eastern Europe and the U.S., and waning public support for continuing Western military largesse, are concerns that are unlikely to go away.

Major oil producer Russia also stands to benefit from a rise in oil prices amid instability in the Middle East, given that the conflict has the potential to draw in neighboring territories.

Oil prices popped 4% Monday following Hamas’ surprise attack on Israel but prices have since stabilized, although crude futures traded 1% higher on Thursday as instability in the Middle East ticked higher.

Increased oil prices help oil exporter Moscow to prop up its reserves with the economically-isolated country now relying more heavily on oil export revenues, and even more so as it plans a huge boost to defense spending in 2024.

“The oil price dimension is also important too, because higher oil prices are obviously beneficial padding for the Russian economy, and can fund the massive expansion of Russia’s defense budget, which in 2024, will reach 6% of the GDP,” Ramani told CNBC.

The International Energy Agency said in its latest monthly oil market report Thursday that while the Israel-Hamas war had not yet had a direct impact on physical supply, oil markets would “remain on tenterhooks” as the crisis unfolds.

Russia is one of the few countries to have good relations with Israel and a number of countries in the Middle East, and could potentially use those relationships to act as a mediator between bitter rivals such as Israel and Iran, with hostilities coming to the fore as Israeli forces battle Iran-backed Hamas militants.

As such, the war between Israel and Hamas also provides Russia with an opportunity to flex its diplomatic muscles in the Middle East, after something of a hiatus from the global stage.

“The Russians also seen this as an opportunity to act as a diplomatic player in the region,” Ramani noted.

“They have already engaged with Lebanon on preventing a spillover of the conflict and the opening of a second front. They’ve talked to Iraq, with the Iraqi Prime Minister visiting Russia, and they’ve tied that to OPEC+ cooperation too, they’ve engaged with Turkey on the issue of Palestinian civilians, and with Egypt on a ceasefire. So this shows that Russia is not isolated in the Middle East, and Russia still maintains the same array of diplomatic partnerships that it had before the war,” he noted.

If diplomatic efforts fail in the Middle East, and there seems little space for negotiation during this “hot” phase of the war right now, there is every chance that the violence could engulf the wider region. That could pose a big challenge for Russia, a country with vested interests in Syria, Iraq and Iran, particularly on a military level.

Russia has military bases in Syria and Western intelligence strongly suggests it has turned to Iran for weaponry for use in Ukraine, although both Moscow and Tehran deny this.

“There are also some risks for the Russians too, in particularly I think the risks stem from a war that drags Israel and Iran together in an expansive conflict,” Ramani noted.

“The Israelis, if they strike Syria, for example, and if Syria gets involved then that could lead to the death of Russian personnel,” Ramani noted.

“The Russians also want to be able to maintain their relationships with the Iraqi PMF,” referring to Iraq’s paramilitary Popular Mobilization Forces, established in response to the Islamic State group’s emergence across Iraq and still influential as an umbrella-group overseeing varying militias in Iraq.

“The PMF is useful for Russia because it helps engage with them on Syrian-Iraqi border security and also PMF-allied outlets have spread favorable images of Russia’s war in Ukraine.”

“The Russians, most of all, don’t want to choose between military ally Iran, and long-standing partner Israel,” Ramani said.