Supply cuts in the Middle East hit Asia, and many Asian countries such as the Philippines and South Korea urgently turned to Russian oil

# Dong Jing

Source: Wallstreetcn

Reports say that taking advantage of the 30-day exemption from U.S. sanctions on Russian oil, many Asian countries highly dependent on Middle Eastern energy — including the Philippines, South Korea and India — are urgently resuming or expanding purchases of Russian oil to fill supply gaps and ease domestic energy emergencies. The Philippines has declared a state of energy emergency, with refiner Petron buying 2.5 million barrels of Russian oil; India’s purchases have doubled to 1.9 million barrels per day.

The energy crisis triggered by the Middle East conflict is forcing many Asian nations to reassess their oil supply sources, with Russian crude filling the shortfall.

On April 1, the Financial Times reported that after the U.S. issued a 30-day exemption from sanctions on Russian oil last month, Asian countries including the Philippines, South Korea, Vietnam, Sri Lanka, Thailand and Indonesia have successively resumed or increased their procurement of Russian oil.

According to a Wallstreetcn article, the U.S. Treasury Department’s Office of Foreign Assets Control previously issued a general license temporarily relaxing sanctions on Russian oil, in response to disruptions to shipping in the Strait of Hormuz that have roiled energy markets.

Iran’s closure of the Strait of Hormuz has blocked oil shipments, putting heavy pressure on Asian governments. Several countries have declared energy emergencies, introduced energy-saving measures such as a four-day workweek and remote work incentives, and expanded fuel subsidies. Philippine President Marcos said last week: “No options are off the table; we are considering all possible measures.”

Hit by the Iran conflict and shipping disruptions through the Strait of Hormuz, the international oil benchmark Brent crude surged 63% in March alone, marking its largest monthly gain in decades.

## Supply Rupture: Heavy Reliance on Middle East Hits Asia Hardest

Asia is among the regions hardest hit by the energy crisis, reports note. Countries including the Philippines, Vietnam, Malaysia, Thailand and Singapore rely heavily on Middle Eastern crude, which accounts for the majority of their total oil imports.

Since Iran closed the Strait of Hormuz, oil and natural gas shipping lanes have been blocked. Asian nations face not only crude shortages but also disruptions to liquefied natural gas imports. To make up for power and industrial gas shortfalls, many countries have sharply increased coal use.

The 30-day U.S. sanctions exemption issued last month created regulatory space for Asian countries to buy Russian oil, and they have moved quickly, the report points out.

June Goh, senior oil market analyst at Singapore-based commodity analyst firm Sparta Commodities, said:

“These countries are desperate right now. They want to maximize the use of the U.S. sanctions exemption. Russia is the only option left. How can you say no when someone offers you oil when you need it most?”

Previously, around 85% of Russia’s crude exports went to India and another major Asian economy, which together dominated Russian oil flows, according to shipping data firm Veson Nautical. As the U.S. softened its stance, other Asian nations have begun joining in.

## Philippines, India Lead Russian Oil Purchases

The Philippines is among the most active countries shifting to Russian oil, the report notes. According to data provider Kpler, two tankers carrying Russian oil arrived in the Philippines last week, the first such shipments since November 2021.

Petron Corp, the Philippines’ only oil refiner, said it had bought 2.5 million barrels of Russian crude. Petron supplies roughly 30% of the country’s fuel and previously sourced nearly all its crude from the Middle East.

The company emphasized that the purchase was “not part of its regular procurement strategy” but an “extraordinary emergency measure taken out of extreme urgency after exhausting all commercially and operationally viable alternatives.”

The Philippines has formally declared a state of energy emergency. President Ferdinand Marcos Jr. said clearly last week that the country would actively seek alternative supply sources unaffected by the Middle East war.

India has also moved aggressively in this buying spree. According to Kpler, Indian refiners imported 1 million barrels per day of Russian crude in February, doubling to 1.9 million bpd by the end of March.

To secure supplies, India has even been willing to pay a premium of nearly 5% above market prices, diverting some Russian crude originally destined for other markets.

Reliance Industries, India’s largest private refiner controlled by Asia’s richest man Mukesh Ambani, resumed imports of Russian crude after the U.S. eased sanctions.

## South Korea, Vietnam, Thailand Follow Up with Talks or Purchases

South Korea has not yet bought Russian crude but has imported 27,000 metric tons of Russian naphtha, a petroleum derivative used in plastics production. The country is implementing large-scale energy-saving campaigns, with energy supply pressures continuing to rise.

Vietnam’s refiner Binh Son Refining and Petrochemical is in talks with Russian partners.

Sri Lanka’s state-owned Ceylon Petroleum Corp told Bloomberg this week it is also negotiating with Russian oil companies. Officials in Thailand and Indonesia have publicly expressed willingness to consider purchasing Russian oil.

Analysts note that with Middle East tensions persistent and the U.S. sanctions exemption window limited, whether Asian countries can lock in sufficient supplies within the 30-day period will be a key factor shaping regional energy stability.

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