Go into supply: Philippines enters into purchases of Russian oil
Russia and the Philippines are working on oil supplies to the republic, the embassy in Manila told Izvestia. The country has not yet received Russian energy resources, and the details of the first purchase are still being worked out. South Korea has already followed the example of the Philippines by purchasing Russian naphtha. Vietnam, Sri Lanka, Thailand and Indonesia, which are on the verge of a fuel crisis due to the blockade of the Strait of Hormuz, may join it. About how the demand for Russian energy resources has grown in Asia and how Russia's oil export revenues can increase, see the Izvestia article.
Philippines is ready to purchase Russian oil
After the outbreak of conflict in the Middle East and the lockdown of Hormuz, Asian states lost vital oil supplies from the Persian Gulf countries. Due to the threat of a shortage of energy resources, they decided to purchase oil from Russia. In particular, the Philippines is already agreeing on the terms of the deal, the diplomatic mission of Manila in the Russian Federation told Izvestia.
"In early March, appeals were sent through diplomatic channels to the government of the Philippines about its intention to purchase petroleum products and crude oil from Russia," they said. — We facilitate spot purchases of petroleum products within the framework of intergovernmental agreements, which may happen later.
Earlier, the Financial Times wrote that the Philippines is in a desperate situation due to a shortage of energy resources and the country has already received the first shipments of Russian oil and petroleum products for the first time since November 2021. According to Bloomberg, it has already purchased 2.48 million barrels of Russian oil. However, the Philippine Embassy in Russia denied this in a comment to Izvestia, saying that Manila had not yet received the raw materials and was only working out the details of the purchase.
After the outbreak of war in the Middle East, the Philippines declared a state of emergency in the energy sector. A week ago, President Ferdinand Marcos Jr. admitted that there would only be enough oil for three months and it was necessary to look for suppliers. It is noteworthy that the republic was placed in this position by its close ally, the United States. Direct imports of American crude oil are sporadic and are not even among the top 5 shipments for the Philippines.
The country is really heavily dependent on fuel purchases, the cost of which has reached historically high levels, Evgeny Sumarokov, associate professor at the Financial University under the Government of the Russian Federation, explained to Izvestia.
— The Philippines is taking extensive measures to find fuel, as the country's dwindling reserves are expected to last only 45 days. The Philippine Department of Energy has also activated an emergency fund in the amount of 20 billion pesos, which Energy Minister Sharon Garin called a preventive step to ensure fuel supplies, the expert said.
The country can also purchase liquefied natural gas from the Russian Federation. In early March, Deputy Prime Minister Alexander Novak said that Russia intends to redirect part of LNG supplies from Europe to the Asia-Pacific region, including the Philippines. However, the embassy cannot confirm whether parallel negotiations are underway through other channels on its purchase.
So far, the purchase of Russian oil has been forced, since previously 98% of the Philippines' imports were to the Middle East, Viktor Yemchenko, a financial expert and head of the NPB Markets training center, clarified in a conversation with Izvestia.
Another Asian country found itself in the same difficult situation, and it is also very pro-American, if not even the most loyal to Washington in this region. Before the Iranian war, South Korea bought up to 70% of its oil from the Persian Gulf countries. Now, the Ministry of Industry, Trade and Energy has confirmed that a local company imported Russian naphtha, the local News1 agency writes.
Japan, which has also joined the anti-Russian sanctions, plans to send a delegation to Russia and discuss the resumption of oil purchases, Kyodo news agency reported, citing sources. It is expected to include the largest players, in particular Mitsubishi Corporation. The visit may take place as early as May.
Both Manila and Seoul were able to start direct purchases from Russia after the United States unexpectedly lifted the sale of oil and petroleum products from Russia on March 12. The relief is valid for 30 days until April 11.
"The White House took this step to stabilize prices and prevent the collapse of its Asian allies, whose refineries technically depend on raw materials comparable to Russian ones," Yemchenko said.
Washington does not hide the fact that the measure is temporary. As soon as prices in the energy market stabilize, sanctions are planned to be restored.
Which other Asian countries can start importing oil from Russia
In addition to the Philippines and South Korea, other East Asian states are also interested in Russian energy resources. The Thai Ministry of Energy is preparing to begin negotiations on the purchase of crude oil to compensate for a possible shortage. According to media reports, Vietnam, Sri Lanka, and Indonesia are either negotiating or ready to start purchasing.
The supply deficit in the region exceeded 2 million barrels per day. A number of countries have already experienced the negative effects of the fuel crisis. For example, Sri Lanka has introduced a four-day working week so that citizens do not travel to work and study on the new weekend, saving gasoline.
Today, Russian oil is the only way for the countries of the region to avoid energy paralysis, Viktor Yemchenko believes. At the same time, it is important to understand that this is an operational overlap of the deficit, and not a long-term cooperation.
—Russia is not a monopolist, cargoes from the United States, Venezuela, and Brazil are available on the market, but the logistical accessibility of the ports of Kozmino (Primorye) and Primorsk (Baltika) makes Russia one of the beneficiaries of the crisis," the expert believes.
In particular, this refers to the pipeline running from Eastern Siberia to the Pacific coast with its final destination in the port of Kozmino. From there, the oil is transported by tanker to importing countries. There is now a queue among foreign countries for Russian energy resources, said Kirill Dmitriev, head of the Russian Direct Investment Fund (RDIF) and special representative of the President of the Russian Federation for investment and economic cooperation with foreign countries.
So the head of the Russian Direct Investment Fund commented on the message of the Cabinet of Ministers of the Russian Federation, which imposed a temporary ban on the export of gasoline for oil companies until July 31. Such a step is necessary so that excessive external demand does not lead to a shortage of energy resources within the country.
Today, Moscow is increasing supplies to Asia, balancing the market and preventing a price spike above $120 per barrel, while remaining a beneficiary, Armen Tadevosyan, adviser on strategic development of the AEB energy agenda, said in a conversation with Izvestia. According to Bloomberg, Russia's oil export revenues have grown to a maximum in four years, and if prices remain high until the end of 2026, Russia's profit from its exports could increase by $40 billion.
If the blockade of the Strait of Hormuz lasts for more than three months, it will cause a global catastrophe due to disruption of global supply chains of oil, LNG, metals and fertilizers. Therefore, the only way out will be the complete or partial lifting of sanctions against the Russian Federation in these areas, the expert concludes.
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