Price pledge: Asian countries are not coping with the fuel crisis

Oil prices went up again on March 12, but strategic reserves still cannot reassure investors. The shock is most acutely felt in Asia: Japan is printing stocks, Indonesia is preparing to expand subsidies, and other countries in the region are trying to contain rising fuel prices. In this situation, Washington is discussing a possible easing of sanctions against Russian oil, primarily for individual buyers. It was the energy crisis that became the topic of a meeting between Russian Special Envoy Kirill Dmitriev and the American side in the United States. Experts are confident that lifting restrictions on Russian oil can partially affect the situation, but drastic price changes should not be expected.

The energy crisis in Asia

Prices on the global oil market are increasing, despite the already announced record release of strategic reserves. The cost of Brent is around $ 100 per barrel, before that it reached $ 119.5 at its peak. The International Energy Agency (IEA), which includes the G7 countries, has already agreed on the largest release in its history of 400 million barrels from reserves, of which 172 million are in the United States.

Traffic through the Strait of Hormuz, which provides a fifth of the world's oil and LNG supplies, has decreased by 97% since the beginning of hostilities in Iran. As of March 12, at least 16 vessels have been attacked in the area of the artery and adjacent waters since the end of February. Recent episodes include a strike on two fuel tankers in Iraqi waters, which killed at least one crew member.

The crisis is particularly acute in Asia, where 60% of imports traditionally come from the Middle East. The region is already experiencing a drop in refinery and petrochemical utilization: companies in Singapore, Japan, India and South Korea are forced to reduce production or declare force majeure due to logistical disruptions. Moreover, the Indians, Japanese and Koreans import over 80-90% of their oil consumption, so their economies may be particularly affected by rising prices.

It is important to understand that when oil and fuel become more expensive, the costs of transportation, electricity, production and imports rise sharply in the region. This accelerates inflation and slows down economic growth. In India, every additional $10 to the oil price can lead to a 0.5% loss in GDP growth, Valery Andrianov, associate professor at the Financial University under the Government of the Russian Federation, told Izvestia.

China's situation is more stable: Beijing can soften the blow due to accumulated reserves of 1.2–1.3 billion barrels. The rest of the Asia-Pacific countries are taking emergency measures. Japan has announced the release of 80 million barrels, which is equivalent to 45 days of consumption, and Tokyo retains subsidies to keep gasoline prices down.

Indonesia, where the oil price of $70 was included in the budget for 2026, is now preparing to expand subsidies. In South Korea, for the first time in almost 30 years, the authorities decided to introduce a ceiling on domestic fuel prices. Thailand freezes the price of household gas until May and expands subsidies for biodiesel, while Vietnam warns of the risk of a shortage of jet fuel as early as April and at the same time reduces the tax burden on fuel imports. Bangladesh has introduced daily limits on the sale of gasoline and diesel.

The price situation in Europe

In Europe, the oil shock is already hitting the economy through higher prices for fuel, energy and transportation. It is significant that the crisis is pushing individual European countries to reconsider their previous restrictions. Romania has announced its readiness to restart the Petrotel refinery owned by Lukoil: Energy Minister Bogdan Ivan said that Bucharest had already held informal consultations with the American side and was now counting on the formal approval of OFAC. According to him, the launch of the enterprise would allow adding capacities to the market that provide up to 20% of oil refining in the country.

On March 11, EU member states began a coordinated release of diesel fuel from stocks, which reduced prices at gas stations from €2.5 to €2.2 per liter, but this is a temporary measure, Andrianov said. In the case of Europe, everything will depend on how long the blockade of the Strait of Hormuz will last.

— After abandoning oil from the Russian Federation in December 2022 and petroleum products in February 2023, Europe switched to buying oil in the Middle East, and petroleum products in the Asia-Pacific region: in India and China. And now both of these areas are under attack," he said.

A temporary measure may be to reduce excise taxes: their share in the final cost of fuel in the EU reaches 45-60%, depending on the country. Ultimately, it is worth waiting for oil prices to stabilize at a level that is 30-50% higher than at the beginning of 2026, the expert concluded.

At the same time, Europe will not remain completely without Russian-origin petroleum products: the diversification of supplies from the United States, the Middle East and other countries does not look sustainable, said Dmitry Kasatkin, Managing Partner of Kasatkin Consulting. Such a replacement is usually more expensive and requires more complex logistics. At the same time, if sanctions had not been imposed on Russian oil, the situation in the world could have been a little better.

— Currently, oil and petroleum products take long and expensive routes, with extra costs for transportation, insurance and intermediaries. Without sanctions, deliveries would be easier, faster and cheaper. As a result, the reaction to what is happening, expressed in the price, would be more restrained," the expert said.

Dmitriev's trip to the USA

Kirill Dmitriev, Special Representative of the President of Russia for Investment and Economic cooperation with Foreign countries, head of the Russian Direct Investment Fund, visited the United States. On the American side, special presidential envoys Steve Witkoff and Jared Kushner, as well as senior White House adviser Josh Grunbaum participated in the negotiations.

We discussed both promising projects that can contribute to the restoration of Russian-American relations, as well as the current crisis situation in global energy markets, Dmitriev said.

"Today, many countries, primarily the United States, are beginning to better understand the key, system—forming role of Russian oil and gas in ensuring the stability of the global economy, as well as the ineffectiveness and destructive nature of sanctions against Russia," said the special representative of the President of Russia.

According to media reports, the Donald Trump administration is considering the possibility of targeted exemptions from the sanctions regime, primarily for India. Trump himself publicly confirmed his readiness to lift some of the restrictions to saturate the market, and Treasury Secretary Scott Bessent allowed the withdrawal of shipments of raw materials from the sanctions at sea.

At the same time, US Secretary of Energy Chris Wright said that Moscow would not receive sanctions relief despite rising oil prices. It is not known whether his statement should be considered Washington's last word, since the United States is already paying for high energy prices.

Gasoline in the country has risen in price by 20% since the beginning of the war, to $3.58 per gallon, which is causing concern among Republicans before the congressional elections. At the same time, the United States continues to reproach that the conflict in the Middle East and exceptions to sanctions increase Russia's oil revenues and weaken the previous policy of sanctions pressure. The head of the European Commission, Ursula von der Leyen, said that a return to purchases of Russian energy resources "would be a strategic mistake."

In practice, the softening of the American position is already noticeable in India. After Washington allowed a month to complete transactions on oil shipped before March 5, local refineries resumed purchases. For the first time, the Russian Urals brand was traded in Indian ports at a premium to Brent. It is worth remembering that in late 2025 and early 2026, after unprecedented US pressure on India, oil supplies from Russia to this country decreased. Although the authorities in New Delhi stated that they would not abandon energy cooperation with Moscow, private companies slowed down purchases, which caused some of the oil already shipped to "hang" in the sea.

How can Russian oil affect global prices?

According to Bloomberg, at the beginning of March, about 15 million barrels were on tankers in the Arabian Sea and the Bay of Bengal, and another 7 million were off Singapore. After the attacks on Iran began, Indian refineries began to quickly buy back these shipments. We are talking about the supply of only 22-30 million barrels, which were previously stuck on their way to India, which is equivalent to the daily oil cargo traffic through the Strait of Hormuz, Andrianov explained.

Moreover, requests for sanctions relief are no longer just coming from India. Bangladesh has officially asked the United States to grant temporary permission for the purchase of Russian oil: Finance Minister Amir Khosru Mahmoud Chowdhury said he had submitted such a request to U.S. Ambassador Brent Christensen, indicating that Dhaka would like to receive a regime similar to that previously granted to India.

The partial lifting of sanctions will have the greatest impact not on crude oil prices, but on gasoline, diesel and kerosene, Dmitry Kasatkin noted. They will become easier to sell and transport, which means that the deficit will decrease, and prices may decrease slightly.

Alexander Frolov, Deputy Director General of the National Energy Institute, expressed a similar opinion. According to him, the lifting of sanctions on Russian oil may have a downward impact.

At the same time, he noted that in the face of increasing shortages, Russian energy resources will in any case be in demand, so the possible suspension of some sanctions will only be a way to demonstrate that the US authorities are managing the process. However, even such a situation can have consequences.

— It's one thing if you remove some of the barriers between Russia and the buyers of its energy resources, and thereby pretend that the sale of Russian raw materials is under your control. It's another matter if everyone starts ignoring your restrictions by showing up," Frolov said.

For Russian oil companies, an increase in purchases of their resources will be a positive factor, both due to higher world prices and through a possible reduction in the discount, said Dmitry Scriabin, portfolio manager at Alfa Capital Management Company. In general, rising commodity prices are supporting the Russian economy: export earnings are increasing, budget revenues are growing, and the trade balance is improving.

However, as Dmitry Gusev, Deputy Chairman of the Supervisory Board of the Reliable Partner Association, previously reported, public information about quotations sometimes does not correspond to real sales conditions and budget revenues. Due to the circumvention of sanctions restrictions, Russian exporters are using discounts unknown to the market, so in fact some oil shipments may still be sold below the $60 level, depending on the supply basis.

Meanwhile, Russian oil alone is not capable of stabilizing the global market. In the current situation, the problem is on the scale of a shock: almost 20 million barrels per day have been blocked in the Middle East. JPMorgan warns that without safe passage through Hormuz, any policy measures will have limited effect. Even the release of 172 million barrels from the United States will last for about 120 days, and the IEA itself admits that this is a temporary relief, not a restoration of normal flows.

Even if the active phase of the conflict turns out to be short-term, the likelihood of a re-escalation may keep oil prices above fundamental levels for several quarters, Dmitry Scriabin emphasized. In such circumstances, the geopolitical factor is a key driver of price dynamics.