Asian Countries Make Major Push to Purchase Russian Oil as European Natural Gas Prices Soar

Question: How will Asia’s rush to buy Russian oil reshape global energy trade?

Due to the Strait of Hormuz blockade causing disruptions in oil transportation, many Asian countries are experiencing an “oil shortage,” with Laos even seeing over 40% of its gas stations temporarily shut down due to supply shortages. According to the latest estimate from the Commodity Strategy Team at Société Générale, current oil flow through the Strait of Hormuz is only about 500,000 barrels per day, a decrease of 19.5 million barrels per day from the previous average. Meanwhile, Asian economies import over 13 million barrels per day through the Strait—about 50% of the region’s total imports—posing a severe challenge to regional energy security. Countries like the Philippines, Myanmar, and Vietnam have oil reserves that can only last 20 to 40 days, while India and South Korea’s reserves can sustain only 74 and 73 days, respectively.

Since the U.S. has temporarily lifted the ban on Russian oil, Asian countries are rushing to purchase Russian oil to address the energy crisis. Within a week of the lifting, Indian refineries bought approximately 30 million barrels of Russian oil. According to Vortexa Ltd., at least seven oil tankers carrying Russian oil have changed their destinations to India during their voyages. Additionally, countries like the Philippines, Thailand, and Indonesia are also in contact with Russia to buy oil. The commodities intelligence firm Kpler estimates that as of March 6, about 130 million barrels of Russian crude oil remain at sea, with 54 million barrels located between the Suez Canal and Singapore. Data shows that the price of Russian Far East crude oil has surged significantly due to the rush buying, and it is expected that May shipments will be priced about $10 per barrel higher than Brent crude.

On one side, Asian countries are purchasing Russian oil to ease the energy crisis; on the other, European natural gas prices are soaring. On March 19, European natural gas prices jumped 27% due to damage to Qatar’s liquefied natural gas (LNG) facilities. Qatar Energy announced that several of its LNG facilities were hit by missile attacks and caught fire early that morning. According to the U.S. Energy Information Administration, Qatar is one of the world’s largest LNG exporters, accounting for about 20% of global exports.

Source: Financial界汽车

Author: Liu Hang