Philippine Crude Deal Signals Russia's Wartime Gains in Southeast Asia
State oil company Petron bought 2.5 million barrels of Russian crude in March, Manila's first such purchase since 2021, as Hormuz disruption shifts Asian sourcing.
Philippine state oil company Petron purchased 2.5 million barrels of Russian crude in March 2026 — the country's first such deal since 2021 — as the closure of the Strait of Hormuz pushed Southeast Asian buyers toward alternatives they had long avoided. The transaction came under a United States government waiver, giving Manila political cover to proceed without triggering secondary sanctions.3
ICE Brent crude front-month traded at $72.89 on Friday (2026-06-26), up 0.5 percent on the day. Urals crude was quoted at $58.83 on the same date, a discount of around $14 a barrel that has proved wide enough to draw buyers from Manila to Jakarta. For Russia, the differential has turned a sanctions-induced pricing penalty into a competitive tool at exactly the moment Asian demand for alternative supply is highest.3
The Hormuz disruption did more than temporarily lift Russian export volumes. It encouraged Asian governments to reconsider what buying Russian oil represents politically, eroding the stigma that Western sanctions were designed to sustain. Countries that have publicly aligned with Washington find themselves quietly reaching for Russian barrels when supply is tight and the premium on alternatives is acute.3
China moved furthest and fastest. Its imports of Russian oil jumped 35 percent year over year in the first quarter of 2026, according to official customs data. Beijing holds around 1.23 billion barrels in onshore crude inventory — sufficient for roughly 92 days of refining needs, according to Kpler senior oil analyst Muyu Xu — a buffer large enough to absorb short-term disruptions and give Chinese buyers leverage when locking in longer-term Russian supply agreements.1
The gas dimension runs alongside the oil shift. Russian President Vladimir Putin met Chinese leader Xi Jinping in Beijing on Wednesday (2026-05-20) with the Power of Siberia 2 pipeline project on the agenda. Kremlin foreign policy aide Yuri Ushakov said the project "will be discussed in great detail between the leaders." The proposed 2,600-kilometre pipeline would carry 50 billion cubic metres annually from Russia's Yamal fields to China, complementing the existing Power of Siberia 1 system, which already delivers about 38 billion cubic metres a year following an agreed expansion.1,2
Pricing remains the sticking point. China reportedly wanted terms matching Russia's domestic gas rate of around $120 to $130 per 1,000 cubic metres. Moscow sought terms closer to those in the Power of Siberia 1 contract. Neither side disclosed where negotiations landed, and the gap remains material to the project's economics and timeline.1,2
The Philippine oil deal is a narrower commercial arrangement but follows the same logic: a buyer accepting Russian supply because alternatives are more expensive, harder to source, or politically complicated in ways the Hormuz shock temporarily dissolved. The waiver structure Washington extended to Manila illustrates the limits of the sanctions architecture when acute supply disruption is under way. Granting exceptions to political allies weakens the broader enforcement signal, even if each individual waiver is pragmatically justified.3
VLCC earnings approached $470,000 a day during the peak of the Hormuz disruption, reflecting the premium attached to finding alternative routes and grades. The supply shock's legacy — Southeast Asian buyers with fresh Russian relationships and, in some cases, new contractual templates — may outlast the crisis itself. Whether Manila renews or allows its Russian supply window to close depends on how quickly Hormuz flows recover and whether Washington extends or tightens the waiver regime. Traders watching the Urals-Brent spread will have a live signal for how durable the demand shift proves once Middle Eastern barrels return to market.3