The Middle East conflict, and Iran’s shuttering of the Strait of Hormuz, has thrown the world into its worst energy crisis in decades. Southeast Asia, which relies on the region for over half of its oil and LNG imports, has been particularly hard hit, with governments frantically looking for alternate sources of oil and gas.
The answer is coming from Russia, a one-time pariah that’s now receiving a steady flow of interest from Southeast Asian leaders desperate for crude oil that’s not stuck behind the blocked Strait of Hormuz.
On April 18, Malaysia joined a growing number of Southeast Asian nations hoping to tap Russia’s stocks of crude oil. Petronas, Malaysia’s national oil company, is set to negotiate for sufficient supplies of oil for domestic use. The move marks the region’s most significant return to Russian oil since 2022, when the U.S. and Europe imposed sanctions following Moscow’s invasion of Ukraine.
“Fortunately, our relations with Russia remain good,” Anwar Ibrahim, Malaysia’s prime minister, told local publication Sinar Harian. “Therefore, the Petronas team can negotiate with them.”
A regional pivot
Other Southeast Asian countries are also pivoting to Russian crude oil. On April 13, Indonesia President Prabowo Subianto flew to Moscow for a meeting with his Russian counterpart, Vladimir Putin, where the two explored priority areas for cooperation, including the “economic and energy sectors.”
The country’s energy minister, Bahlil Lahadalia, later signaled that Jakarta could expect inflows of Russian oil by the end of the month, with state energy firm Pertamina involved in the deal. “The sooner, the better,” Bahlil told reporters.
Vietnam, too, is embracing Russian energy. On March 30, Vietnamese refinery Binh Son Refining and Petrochemical said it was in talks with Russian partners to buy crude oil.
Russia is also offering more than just fossil fuels: Russian state corporation Rosatom will build two reactors for Vietnam’s first nuclear energy plant, the Ninh Thuan 1 Nuclear Power Plant, which is set to go online by 2035.
Pragmatism over principle
As the U.S.-Iran war drags on, many countries have loosened their limits on Russian energy, as pragmatism takes precedence in a time of tight energy supply.
Last Friday, Washington renewed a waiver allowing U.S. firms to purchase sanctioned Russian oil, replacing an agreement set to expire on April 11. In March, Chinese oil majors Sinopec and PetroChina also returned to seeking Russian crude cargoes following a four-month hiatus, Reuters reported.
Southeast Asian officials have cited “national interests” as a reason to pivot to Russian crude.
“Global circumstances have prompted the government to identify alternative sources of oil, reaching out to more than one country,” said Bahlil, on April 16. “We require around 300 million barrels of crude oil annually. Therefore, we will seize every opportunity because it is important to pursue all options that serve national interests.”
This has led to an unexpected windfall for Russia. According to the Paris-based International Energy Agency, Russia’s March crude oil exports rose by 270,000 barrels per day, while its oil product revenues nearly doubled from $9.75 billion in February to $19 billion in March.
