Roughly 20% of global oil supply has been removed from markets after a month-long U.S. And Israeli military campaign in Iran, triggering a scramble among Asian importers for cargoes already at sea, industry analysts say. The sudden squeeze prompted the U.S. To temporarily ease sanctions on Russian oil shipments that were en route, accelerating buying interest across Southeast Asia, according to the Associated Press. Traders and refiners face tight availability rather than a lack of demand. A key near-term hinge is whether Washington extends its waiver on Russian crude beyond April, a decision market participants say will determine how long the current buying window lasts.

The military campaign in Iran, now roughly a month old, has had an immediate effect on global energy flows, the Associated Press reports. Industry sources told the AP that the campaign removed about one fifth of world oil supply, sending tankers and traders into a fierce competition for shipments that are already on the water. That disruption pushed Washington to grant a temporary waiver on sanctions for Russian oil cargoes that were already en route, a step that opened limited access for Asian buyers and intensified demand this month.

Buyers converge on a short pool of cargoes

Asian importers, led by China and India, had already been the largest purchasers of discounted Russian crude before the Iran campaign, the Associated Press notes. India typically consumes between 5.5 million and 6 million barrels a day, while China buys at scale. Those steady flows had created intense competition for a finite number of cargoes at sea. Kpler, the market analytics firm, estimated about 126 million barrels of crude were available worldwide at the time of the AP report, and the firm’s senior crude analyst Muyu Xu warned that the core problem is the availability of cargoes already at sea rather than an absence of buyers.

Ms. Xu told the AP that the opportunity to secure discounted Russian shipments is short-lived unless Washington extends its temporary waiver beyond April. Traders in the Philippines, Indonesia, Thailand and Vietnam signaled new interest this month after the U.S. Move, and that limited window helped push up buying activity across Southeast Asia.

Geopolitical risk reshapes trade and investment

The World Economic Forum’s risk survey and reporting place state-based armed conflict at the top of near-term global risks, and the forum says rising policy unpredictability is complicating trade and supply-route planning. World Economic Forum President and CEO Børge Brende framed the moment as one in which the world is "at an inflection point," saying broader geopolitical fragmentation is reshaping trade flows and investment decisions. That analysis ties into moves by ASEAN economies, where the bloc is shifting toward pragmatic multi-alignment, expanding ties with China, the United States and the European Union while pursuing deals that boost energy and trade links.

Those regional shifts increase competition for nearer-term fuel deliveries, the World Economic Forum reports, because rising trade volumes and growing policy churn raise the costs and difficulty of re-routing critical supplies. The WEF added that businesses have so far been able to re-route trade flows to manage shocks, but higher effective tariff rates and policy unpredictability can amplify logistics bottlenecks.

Mastheads

Supply constraints, meanwhile, are uneven and contested. The Associated Press reported that Russia’s ability to raise shipments is limited by existing export levels, infrastructure damage linked to the war in Ukraine and recent drone attacks on facilities. Russian March flows were about 3.8 million barrels a day, up from February but still below mid-2023 peaks.

Those limits mean that even with strong buyer interest, increasing volumes quickly is difficult.

For refiners and traders, the immediate problem has been a mismatch between where barrels sit and where they're needed. Kpler’s figures and market commentary point to a tight market for the cargoes that are physically available. That dynamic is pushing importers to compete over shorter-term deliveries rather than relying on steady, long-term contract flows.

Policy choices in Washington will matter. The temporary U.S.

Waiver that eased sanctions on Russian shipments already en route created a brief opening for Asian buyers. Several governments and market participants have said the waiver’s extension or expiry will determine how much longer the current scramble continues.

At the same time, the World Economic Forum’s analysis of ASEAN points to a structural shift that raises regional demand. As Southeast Asian economies pursue multi-alignment and deepen trade links, their need to secure reliable energy supplies grows. That trend could sustain competition for cargoes when global disruptions occur.

Traders and refiners are adjusting routes and purchase strategies in real time. For now, the market is reacting to the immediate loss of supply and to the brief policy window opened by Washington.

The combined effect is higher competition for the limited set of barrels already afloat, and a market that will be sensitive to any change in the U.S. Waiver decision.

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Markets are now focused on one concrete near-term decision: whether the United States will extend its temporary sanctions waiver on Russian crude beyond April, a move that traders and several Asian governments have said will determine how long discounts and the current buying window last.

This article was created with AI assistance.