Bangkok– Competition for Russian crude is increasing in Asian countries as the energy crisis increases. month long war by the US and Israel against Iran, which has cut off about a fifth of the world’s oil supply.
mostly oil mostly off strait of hormuz was heading towards Asia, hit the hardest From recent energy shocks. on weekends, Iran-backed Houthi rebels entered into conflict, Shipping has been made even more dangerous.
To increase global crude oil supply America has temporarily relaxed the restrictions Russian oil shipments already at sea – first for indiaThen to the rest of the world.
Demand is increasing in Asia while in Russia making billions of dollars. But experts say there is a limit to how much Moscow can increase exports of crude oil, the unrefined petroleum needed to make fuels such as gasoline and diesel, and it is already exporting at levels close to its previous peak.
In addition, Russia’s 4 year old full scale attack Ukraine and its recent drone attacks energy facilities Its export capabilities are being harmed by Kyiv.
For Desperate countries of Asia This opportunity is short-lived and shrinking, said Muyu Xu, a senior crude oil analyst at global trade data firm Kpler.
“The real problem is how much inventory is still available in this market,” he said.
Before the Iran war, China, India and Türkiye were the main importers of Russian oil, which defied Western sanctions at a healthy discount.
Subsequent US and EU sanctions were aimed at disrupting Russia economically. invasion of ukraine.
But the U.S. approval waiver has sent shockwaves through energy-hungry Southeast Asia. This month, the Philippines, Indonesia, Thailand and Vietnam signaled new interest in Russian oil.
Manila, a longtime US ally, imported Russian crude for the first time in five years just days after the announcement. energy emergency.
Others may follow, but the sea will still have to compete with China and India for about 126 million barrels, according to Kpler.
India alone typically requires 5.5 million to 6 million barrels of oil per day.
Analysts say Russia is unlikely to boost exports rapidly. In March, flows were about 3.8 million barrels per day, up from 3.2 million in February but still below the peak of 3.9 million in mid-2023.
Xu said the crisis is a reminder of how quickly geopolitics can change – sometimes driven by just a few decision makers – making it hard for countries to plan ahead. “Right now, really the priority is to ensure your supplies and all other considerations are secondary,” he said.
Xu said Southeast Asian countries competing for dwindling amounts of Russian crude in the sea are hoping the US will extend its sanction waivers beyond April.
Options for these countries are limited, and safe bets – such as crude oil from the US, South America or West Africa – are too far for Asia, meaning shipments may not arrive for months. Poor countries have to struggle due to this.
Airlines in the Philippines are considering fuel rationing. Cash assistance is being provided to the most affected people, such as transport workers. on most days, lines at gas stations Stretch for blocks.
A country of 117 million is one Early warning for Southeast Asia.
According to Kpler data, before the war, the Philippines depended on the Middle East for about 97% of its total seaborne oil imports. The energy emergency declaration is a “new frontier” in its scale and magnitude, said Carlos dela Cruz of the Institute for Climate and Sustainable Cities.
“This will definitely push people further down the poverty line,” he said.
To ease energy shortages, the Philippines imported crude oil, the first time since 2021. Other Southeast Asian countries are also considering similar options.
Vietnamese Prime Minister Pham Minh Chinh Visit to Russia on 23 March This also includes agreements on nuclear energy as well as oil and gas cooperation, as rising diesel prices have begun to impact Vietnam’s manufacturing sector.
In Indonesia, officials said “all countries are potential partners” as they increase stockpiles. This includes Russia and the small oil and gas sultanate of Brunei, Indonesian Energy Minister Bahlil Lahdalia said.
“When you have no other option, all options are on the table,” said Adhiguna, son of the Jakarta-based Energy Shift Institute.
Despite taking similar measures, Thailand is not as desperate as the Philippines, said Jitsai Santaputra of The Lantau Group, an energy consultancy in Bangkok. He said Thailand would wait and see as long as the impact remains limited.
But it is increasing.
Fuel prices in Thailand surged on March 26 after caps and subsidies were lifted, with most fuels rising by about 20 US cents a litre, with diesel rising by about 18% – a blow to industry and transport that risks increasing the price of other commodities.
China and India were prominent in defying Western sanctions Russian crude oil customers Earlier on February 28, America and Israel had attacked Iran.
An additional benefit for India was that US sanctions on Russian crude were lifted about a week before other countries.
“They took advantage of that opportunity and took a lot of stuff,” Xu said. By the time US President Donald Trump allowed everyone else to make purchases, he said, “it was already too late as most of the cargo had already been ordered by China and India”.
Even at the outset, Kpler data suggests India’s crude imports from Russia may not be enough to offset supply shortfalls from the Middle East.
Its oil imports from Russia fell to about 1.9 million barrels per day in March, from about 1 million barrels before the Iran war. Before that conflict, India imported about 2.6 million barrels of crude oil per day from the Middle East.
That may not be enough, said Dattatreya Das of think tank Amber, with the approach of peak energy demand in the summer – driven by travel, agriculture and freight needs – especially as emergency oil reserves run low. He said the short-term purchases cover only a few days’ supply, making it difficult to cover any shortfall without additional shipments from the US or Canada.
“I don’t know how the shortfall will be filled,” he said.
Despite being the fifth largest crude oil producer promote clean energyThere is still strong demand for oil from China’s 1.4 billion population. but this also made A huge oil reserve.
Kpler estimates it has reserves of about 1.2 billion barrels of onshore crude oil. This is about four months of its total seaborne crude oil imports, which minimizes the short-term effects from the war.
According to Kpler, China gets about 13% of its seaborne crude from Iran and about 20% from Russia, financial data group LSEG said.
With ample reserves and deep pockets, some Russian shipments destined for China could be diverted to more desperate countries, analysts say.
“Russia has emerged as a major winner in the entire conflict,” said Sam Reynolds of the US-based Institute for Energy Economics and Financial Analysis. Given the energy crisis, delivery speeds and temporarily low prices, he said Asia has “a huge incentive to import Russian oil.”
“We can debate whether there’s an ethical dilemma there, but I think it’s a reflection of the fact that countries are going to do whatever they need to do to protect their energy security,” he said.
___
Chan reported from Hong Kong and Ghoshal from Hanoi, Vietnam. Associated Press writers Jintamas Saksornchai Contributed to this report in Bangkok.
___
The Associated Press’s climate and environmental coverage receives financial support from several private foundations. AP is solely responsible for all content. find api standards A list of philanthropies to work with, supporters and funded coverage areas ap.org.
