Fuel-thirsty Asian countries line up for Russian oil

Asian countries including Vietnam, Thailand, the Philippines, Indonesia and Sri Lanka are lining up to buy Russian oil as the Iran war blocks supplies, raising the possibility that demand may exceed supply, several sources including Russia said.

Since the war in Ukraine prompted European customers - once the biggest buyers of Russian oil and gas - to shun Moscow, India and China have accounted for around 80% of Russian oil exports. Turkey has also been a significant buyer.

But in recent weeks, a host of Asian countries have been lining up, according to various sources including media and Russia.

"Demand is high, particularly for alternative destinations. As a result, a point may come when it becomes difficult to meet additional demand," Kremlin spokesman Dmitry Peskov said in response to a question about Russian oil demand.

A fifth of global oil production has effectively been blocked from reaching the market due to the U.S.-Israeli war on Iran which has halted traffic through the Strait of Hormuz.

Russia has benefited from high oil prices and a 30-day sanctions waiver from the United States for purchases of Russian oil at sea.

Oil revenues and natural gas sales generate around a quarter of the country's state funds.

Russia's ability to boost oil exports is, however, constrained, in part by Ukrainian drone attacks which have effectively shut down at least 40% of the country's oil-exporting capacity.

TWO TANKERS FOR MANILA

The Philippines has purchased two of Russia's far-eastern ESPO Blend cargoes of some 1.5 million barrels, resuming its Russian oil purchases for the first time in five years, according to LSEG data.

The Sara Sky and Tiger Wings tankers shipped oil to the country's Limay port, where the terminal for the Bataan refinery is located.

Thailand has also held discussions with Russia on potential crude purchases, according to its Deputy Premier Phiphat Ratchakitprakarn.

Several Sri Lankan media outlets reported on talks about Russian oil supplies to Sri Lanka too.

​Vietnam's Prime Minister Pham Minh ‌Chinh visited Moscow this week, asking Russian oil and gas firm Zarubezhneft to boost its investment in Vietnam and to supply crude oil to the Southeast Asian country on a long-term basis.

-Reporting by Reuters; editing by Guy Faulconbridge and Elaine Hardcastle/Reuters