Asia Scrambles for Russian Oil, Poor Countries More Trapped

JAKARTA - Asian countries are beginning to rush to hunt for Russian crude oil as the US and Israeli war against Iran puts pressure on global supplies. Citing Kyodo News, Thursday, April 2, this scramble is sharpening as about a fifth of the world's oil supplies are stalled, while the route from the Strait of Hormuz, which supplies much of Asia, is almost paralyzed.

The situation worsened after the Iranian-backed Houthi group joined the conflict at the weekend. The threat to shipping widened. Amid the pressure, the United States temporarily eased sanctions on the shipment of Russian oil already at sea, first to India, then expanded to other countries.

Demand in Asia immediately rose. Russia also reaped billions of dollars. However, its space is not unlimited. As reported by Kyodo News, Kpler senior analyst Muyu Xu said, the main issue now is not just who wants to buy, but how much cargo is still available in the market. Kpler noted that about 126 million barrels of Russian oil were still at sea, while many countries began to hunt for it.

Russia is also considered difficult to raise exports sharply. In March, its export flow was around 3.8 million barrels per day, up from 3.2 million barrels in February, but still below the mid-2023 peak of 3.9 million barrels per day. The export capacity is also pressured by the war in Ukraine and Kyiv's drone attacks on Russian energy facilities.

In Southeast Asia, the Philippines, Indonesia, Thailand, and Vietnam are beginning to show new interest in Russian oil. The Philippines even imported Russian crude for the first time in five years, just days after declaring a state of energy emergency. Before the war, almost 97 percent of the Philippines' seaborne oil imports came from the Middle East. Now airlines are starting to consider fuel rationing, cash handouts are being rushed in, and queues at gas stations are lengthening.

Still referring to Kyodo News, Vietnam is also starting to move. Prime Minister Pham Minh Chinh's visit to Russia on March 23 resulted in oil and gas cooperation, amid pressure on solar prices in the manufacturing sector. In Indonesia, Minister of Energy and Mineral Resources (ESDM) Bahlil Lahadalia said all countries could be partners to strengthen energy reserves, including Russia and Brunei. Putra Adhiguna from the Energy Shift Institute in Jakarta said that when options are getting narrower, all options are on the table.

Thailand is not as desperate as the Philippines, but the pressure is starting to be felt. After the price and subsidy limits were lifted on March 26, the majority of fuel prices rose by about 20 cents per liter, while solar rose by about 18 percent.

Amid the scramble, China and India remain ahead. Both were already major buyers of Russian oil before the Iran war broke out. India even benefited from the easing of US sanctions coming sooner. Even so, India's imports from Russia, which rose to around 1.9 million barrels per day in March, are still not enough to cover the shortfall in supplies from the Middle East, which before the war reached around 2.6 million barrels per day.

China is also in a safer position because it has large reserves. According to Kpler, its onshore crude oil stocks reached around 1.2 billion barrels, equivalent to almost four months of its seaborne oil imports. About 13 percent of China's seaborne oil imports come from Iran, while about 20 percent come from Russia, according to LSEG.

Analysts assess that Russia is actually one of the parties that benefits the most in this conflict. For many Asian countries, especially the poorer ones, the issue is no longer choosing the ideal energy source, but ensuring that supplies remain available.