Russian oil is in heavy demand as an energy crisis tightens supply just as the U.S. and Israel’s month-old war against Iran has choked off roughly a fifth of the world’s oil supply, according to an Associated Press report. Asian buyers, facing disruptions to the mostly shut Strait of Hormuz and additional threats to shipping after Iran-backed Houthi rebels entered the conflict over the weekend, have increasingly turned to Russian crude. The scramble has been sharpened by a U.S. sanctions waiver that allows some Russian oil shipments already at sea to move, starting with India and later extended to the rest of the world.
Much of the oil from the Strait of Hormuz, long a critical artery for global petroleum flows, has historically moved toward Asia, which has also been hit by recent energy shocks, AP reported. With Iran’s conflict reducing available supplies and shipping risk rising, the energy crunch has pushed governments and importers to search for alternatives that can reach them quickly. For buyers, Russian crude has become one of those near-term options because it is already on the water and can be redirected more easily than crude arriving months later from distant producers.
To shore up global supplies, the United States temporarily eased sanctions on Russian oil shipments already at sea. The AP report said the waiver first applied to India and later expanded to the rest of the world, prompting a surge of interest this month from Southeast Asian countries that had not previously been among the main Russian-oil importers. Before the Iran war, China, India and Turkey were described as the main customers flouting Western sanctions for discounted Russian crude.
In Southeast Asia, the shift has been visible in policy signaling and buying behavior. AP said the Philippines, Indonesia, Thailand and Vietnam “signaled new interest in Russian oil” after the U.S. waiver. Manila, a long-time U.S. ally, imported Russian crude for the first time in five years days after declaring an energy emergency, the report said, while other countries weighed whether they could secure supplies on terms acceptable to their systems.
Analysts said the window for would-be buyers may be limited because Russia’s exports are already close to their earlier peak and because war-related damage and capacity constraints affect what can be shipped. The AP report cited Muyu Xu, a senior crude oil analyst at Kpler, saying the real challenge is not only the waiver or the discounts, but “how much cargo is still available in this market.” AP also reported that Russia’s crude exports were about 3.8 million barrels a day in March, above February’s 3.2 million but still below the mid-2023 peak of 3.9 million.
The AP report described how the Philippines’ squeeze is an early warning for the region. It said airline officials were weighing fuel rationing, cash handouts were being rushed to people hit hardest such as transportation workers, and gas station lines stretched for blocks on many days. Before the war, the Philippines relied on the Middle East for nearly 97% of its seaborne oil imports, according to Kpler data, and the energy emergency declaration was described as “a new frontier” in its scale and magnitude.
AP further reported that to ease shortages, the Philippines imported crude oil—a first since 2021—and that other Southeast Asian nations were considering similar moves. It also linked the broader fuel pressure to industrial concerns, including Vietnam’s diesel price pressure on its manufacturing sector, and said Vietnam’s Prime Minister Pham Minh Chinh’s March 23 visit to Russia included agreements on oil and gas cooperation, along with nuclear energy.
In Indonesia, officials were portrayed as keeping options open as they tried to shore up reserves. AP said Indonesian Energy Minister Bahlil Lahadalia told reporters that “all countries are possible” partners, including Russia and Brunei. Other Indonesian voices, the report said, framed the decision as a practical one: when no options are available, “all options are on the table,” according to Putra Adhiguna of the Jakarta-based Energy Shift Institute. Thailand, by contrast, was described as less desperate than the Philippines, with analysis suggesting it could wait as long as impacts remained limited, even as Thailand’s fuel prices rose after caps and subsidies were lifted.
While Southeast Asia moves to find near-term supplies, China and India have a faster path because they were Russian crude buyers before the conflict against Iran intensified. AP said China and India were major Russian crude oil customers before the U.S. and Israel attacked Iran on Feb. 28, and that India had an extra advantage because U.S. sanctions on Russian crude oil were removed about a week before the broader waiver for other countries. Kpler’s Muyu Xu was quoted saying the delay meant others faced a late start because cargoes had already been ordered.
Even with that head start, analysts said India’s Russian imports may not fully replace lost Middle East supply. AP reported that India’s crude oil imports from Russia likely rose to roughly 1.9 million barrels a day in March from about 1 million barrels before the Iran war, while it had imported around 2.6 million barrels per day of crude oil from the Middle East before the conflict. The report also cited Duttatreya Das of the think tank Ember saying short-term buys cover only a few days of supply and that filling any gap would be difficult without extra shipments from the U.S. or Canada.
China, the AP report said, still faces strong oil demand from its population but also has extensive storage that can cushion short-term shocks. It cited Kpler estimates of about 1.2 billion barrels in onshore crude inventories—nearly four months of seaborne crude imports—and said China sourced about 13% of its seaborne crude from Iran, and roughly 20% from Russia, according to Kpler and LSEG. With those buffers and the ability to redirect shipments, analysts said some Russian cargoes intended for China could move toward more desperate markets.
The AP report concluded that Russia stands to benefit from the broader conflict through higher demand and temporarily lower prices, even as its export growth faces clear ceilings. Sam Reynolds of the U.S.-based Institute for Energy Economics and Financial Analysis was quoted saying Asia has “a much larger incentive to import Russian oil” given energy security pressures, and he said, “We can argue whether there’s a moral dilemma there,” describing it as a reflection of how countries act to protect their energy needs.