Russian crude oil is finding eager buyers across Asia as the U.S. and Israel’s month-old war against Iran tightens global energy supplies and escalates shipping risks. Asian countries are competing for Russian crude because the conflict has choked roughly a fifth of the world’s oil supply, and much of the crude that once moved through the Strait of Hormuz has faced disruption. Over the weekend, Iran-backed Houthi rebels entered the conflict, adding another layer of danger for ships transiting the region.
To ease global crude shortages, the U.S. temporarily eased sanctions on Russian oil shipments already at sea. The waiver began for India and then expanded to other countries, triggering a rapid scramble among buyers seeking near-term cargoes. Demand is rising in Asia as Russia generates billions of dollars from sales, but analysts say the ability to increase exports quickly is constrained.
Muyu Xu, a senior crude oil analyst at Kpler, said the central issue is not just demand but how many cargoes remain available in the market. “The real problem is how much cargo is still available in this market,” she said. Xu added that the crisis reflects how quickly geopolitics can change, sometimes driven by a small number of decision-makers, making it difficult for countries to plan ahead; she said “right now, really the priority is to ensure your supply and all the other considerations are secondary.”
Before the Iran war, China, India and Turkey were the main importers of Russian oil, taking advantage of discounts that Western sanctions were designed to limit after Russia’s invasion of Ukraine. That sanctions pressure, however, has been complicated by the U.S. waiver, which pushed energy-hungry Southeast Asia into the market. This month, the Philippines, Indonesia, Thailand and Vietnam signaled new interest in Russian crude.
For the Philippines, the shift comes amid acute domestic strain. Airlines are weighing fuel rationing, cash handouts are being rushed to people hit hardest—such as transportation workers—and lines at gas stations stretch for blocks on many days, according to the reporting. The Philippines, with a population of about 117 million, also served as an early warning for the region: before the war, it relied on the Middle East for nearly 97% of its total seaborne oil imports, Kpler data show. The Philippines declared an energy emergency, which a climate researcher called a “new frontier” in scale and magnitude, and the country imported Russian crude for the first time in five years, days after the declaration.
Philippine officials’ moves reflect a broader pattern in Southeast Asia. To ease energy shortfalls, the Philippines imported crude oil, and other countries in the region have been weighing similar steps. In Vietnam, a reported March 23 visit by Prime Minister Pham Minh Chinh to Russia included agreements on oil and gas cooperation alongside nuclear energy, as rising diesel prices begin to squeeze the manufacturing sector. In Indonesia, officials said “all countries are possible” partners as they shore up reserves, including Russia and Brunei, and Indonesian Energy Minister Bahlil Lahadalia said that Russia is among the potential suppliers. “When you don’t have any other options, all options are on the table,” said Putra Adhiguna of the Jakarta-based Energy Shift Institute.
Analysts say the supply window for these substitutions is narrow. Xu said the most desperate countries in Asia may be looking for the U.S. to extend the sanctions waiver beyond April, because other crude sources are harder to reach quickly. The options—such as crude oil from the U.S., South America or West Africa—are too far for Asia, meaning shipments would take months to arrive. For poorer nations, that schedule gap can translate into immediate scrambling.
Russia’s own export limits also matter for how long the waiver can help. Experts said Russia is unlikely to boost exports sharply, and flows in March were about 3.8 million barrels a day, above February’s 3.2 million but still below a mid-2023 peak of 3.9 million. They pointed to the challenges of ramping production after Russia’s four-year invasion of Ukraine and the effect of recent drone attacks on its energy facilities.
China and India, meanwhile, have had advantages because of timing. Defying Western sanctions, both countries were major Russian crude buyers before the U.S. and Israel attacked Iran on Feb. 28. India also had an additional head start when U.S. sanctions on Russian crude oil were removed about a week before other countries were able to buy, Xu said, noting that “They took that chance and snapped up quite many cargoes.” Xu said that when the Trump administration allowed everyone else to buy, it was “already a bit too late because most of the cargo had already been ordered” by China and India.
Even with that advantage, Kpler data indicate India’s Russian crude imports in March rose to roughly 1.9 million barrels a day, up from about 1 million barrels a day before the Iran war. India previously imported around 2.6 million barrels per day of crude from the Middle East before the conflict. Duttatreya Das of the think tank Ember said short-term buys can cover only a few days of supply, especially as emergency oil stockpiles run down approaching peak summer energy demand for travel, agriculture and freight, and he said, “I don’t know how the shortfall will be met.”
China’s demand and buffers also differ. Analysts said China’s oil demand remains strong despite its push for clean energy, and they pointed to a stockpile cushion: Kpler estimated China has about 1.2 billion barrels of onshore crude inventories, nearly four months of its overall seaborne crude imports. Kpler data also showed China sourced about 13% of its seaborne crude from Iran and roughly 20% from Russia, based on LSEG. With reserves and the ability to move quickly, analysts said some Russian shipments bound for China could be diverted to more desperate countries.
Sam Reynolds of the U.S.-based Institute for Energy Economics and Financial Analysis said Russia appears to be a “major winner from the entire conflict,” citing factors including delivery speed and temporarily lower prices. He said Asia has “a much larger incentive to import Russian oil,” adding, “We can argue whether there’s a moral dilemma there, but I think it’s a reflection of the fact that countries are going to do whatever they need to protect their energy security.”