"No other choice": Under Middle Eastern conflict, Asian countries are rushing to buy Russian oil

Ask AI · How the Iran War Is Accelerating Asia’s Shift to Russian Oil

Cailian Press, April 1 (Editor: Bian Chun)
Energy-starved Asian countries are seizing the opportunity of U.S. sanctions exemptions to buy Russian oil, filling the supply gap caused by the Iran conflict.

Ship tracking data shows that the Philippines received a batch of ESPO (Eastern Siberia-Pacific Ocean) crude oil for the first time in nearly six years. Meanwhile, South Korea’s first batch of Russian naphtha has arrived at Daejeon Port, currently awaiting unloading. Other countries, including Sri Lanka, are also negotiating with Moscow regarding oil transportation.

The war between the U.S., Israel, and Iran has plunged Asia into a severe energy crisis, with the Strait of Hormuz nearly completely closed, cutting off oil supplies. Under supply disruptions, refineries across Asia are urgently seeking alternative crude oil and refined product sources.

“No other options,” said June Goh, an analyst at Sparta Commodities. “Refineries with less flexibility will be the first to turn to Russian crude because Russian oil is relatively easier to substitute for Middle Eastern supplies.”

As the Iran conflict pushes crude prices higher and the U.S. relaxes long-standing restrictions on Russian oil exports, Russia has become one of the big winners of this conflict. Recent reports indicate that Russia is earning up to $150 million extra daily from oil sales.

On March 5, the U.S. announced a 30-day exemption allowing Indian refiners to resume purchasing Russian oil. Subsequently, the exemption was expanded to other countries and updated to permit the purchase of crude already en route as of March 12.

This move aims to help curb rising oil prices. Following the U.S. “green light,” Asian countries have taken the opportunity to buy Russian crude oil.

According to local Korean media on Tuesday, citing officials from the Ministry of Trade, Industry and Energy, it is currently unclear whether Korean companies can purchase more Russian crude and naphtha, as unloading and payment must be completed before the U.S. exemption expires on April 11. Naphtha, a key raw material for plastics, can also be blended into gasoline.

As the conflict continues, other economies like Japan may also consider importing Russian energy. While Japan must weigh diplomatic implications, the country currently has an urgent need for crude oil and petrochemical raw materials, and is already importing Russian liquefied natural gas.

Before the exemption policy was introduced, Asian buyers of Russian oil mainly consisted of refining companies from India and similar countries, which still account for most of Russia’s oil imports. Recently, India finalized a purchase order for 60 million barrels of Russian oil, to be delivered in April, at a premium of $5 to $15 per barrel over Brent crude.

(Cailian Press, Bian Chun)