Russia is leveraging Asia’s oil shock to deepen ties with Indonesia, offering a massive supply deal and potential infrastructure investment as Jakarta struggles with crude and gasoline deficits, OilPrice.com reported.
The arrangement could reshape Southeast Asia’s energy map and test the limits of US sanctions policy.
Russia seizes opportunity from Middle East turmoil
According to OilPrice.com, Russia has emerged as one of the clearest commercial beneficiaries of the US–Israel war with Iran.
Before March 2026, buying Russian crude was widely treated as a sanctions risk, with only Chinese and some Indian firms willing to absorb it.
That changed when Washington issued waivers for Russian barrels on March 12, acknowledging that Asia could not balance its oil market without Russian supply.
Successive extensions encouraged regional buyers to view Moscow not only as an emergency supplier but as a long‑term energy security partner.
Indonesia, which imports around 370,000 barrels per day of crude and relies on overseas suppliers for about 430,000 barrels per day of gasoline, has become a prime candidate for deeper engagement.
The country’s refining system runs at about 950,000 barrels per day, below its 1.2 million b/d capacity, leaving a structural deficit that forces heavy reliance on imports.
Jakarta’s energy imbalance
Indonesia’s crude output has fallen to 577,000 barrels per day in May 2026, well below the government’s 610,000 bpd target and far from the 1.5 million bpd levels of the 1990s.
Domestic production is insufficient for its refining system, and some local crude is too light for domestic plants.
The imbalance is even sharper in refined products: total petroleum demand is around 1.6 million bpd, forcing Jakarta to import both crude and fuels.
Gasoline demand is about 690,000 bpd, with imports covering as much as 60%.
Diesel imports are smaller thanks to a biodiesel mandate, but Indonesia still buys volumes overseas.
Russia has already supplied sporadic cargoes, including 26,000 bpd in April 2026, and two shipments of Sakhalin Blend crude earlier this year.
The 100‑million‑barrel deal
The turning point came after President Prabowo Subianto’s visit to Moscow in April.
OilPrice.com reported that Russia committed to supplying Indonesia with 100 million barrels of oil at preferential prices, with an option for another 50 million barrels.
Jakarta quickly created a legal route: a regulation in late April authorized public service agencies to import crude and fuels under intergovernmental cooperation.
On June 8, Indonesia’s energy ministry assigned Lemigas, a state agency, responsibility for crude imports, shielding Pertamina from direct ties with sanctioned Russian firms.
Payments remain a challenge, as US dollar settlement is unlikely.
Indonesia’s Energy Minister Bahlil Lahadalia said Russia had expressed willingness to help build infrastructure, potentially including storage terminals or reviving the stalled 300,000 bpd Tuban refinery project with Rosneft.
Such barter‑style arrangements could reduce reliance on conventional monetary settlement.
Strategic implications for Asia
Potential Russian grades for Indonesia include ESPO from Kozmino, Sokol from Sakhalin‑1, and Urals from Primorsk.
ESPO is the most likely option, given its proximity and compatibility with Indonesia’s refining mix.
Longer voyages from Primorsk or Sakhalin could be viable if discounts are deep enough.
The report noted that Indonesia’s case is significant because it is neither a traditional Russian client nor a market able to absorb unlimited sanctions risk.
Yet the shift is clear: Russian oil is increasingly being treated in Southeast Asia not as a prohibited commodity but as an instrument of national energy security.
The Philippines and Vietnam have also begun exploring Russian imports under similar frameworks.
What began as an emergency response to Middle East supply disruptions is evolving into a structural reorientation.
For Russia, the Indonesian opening represents a chance to embed itself in Asia’s energy landscape.
For Jakarta, it offers a way to secure supplies and potentially unlock stalled infrastructure projects.
For Washington, it raises the question of whether sanctions policy can coexist with the energy needs of large importers.
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