Indonesia Says It Will Keep Buying Russian Crude Where the Purchases Comply With Rules

Indonesia's energy and mineral resources minister, Bahlil Lahadalia, confirmed that the country will continue importing Russian oil as long as the transactions satisfy applicable rules. The statement came as President Prabowo Subianto travelled to New Delhi for the BRICS summit, and it tracks the approach that India and China have taken since 2022, which is to treat sanctions as a compliance question rather than a political one.

The economics are straightforward for an importing economy facing Brent near $106 a barrel. Discounted Russian barrels reduce the fuel import bill and the subsidy cost that follows it. The political economy is just as straightforward. Every additional Asian buyer reduces the marginal effect of Western restrictions on Russian export revenue and strengthens the payment and shipping arrangements built outside dollar clearing.

Russia's own domestic fuel market is under strain at the same time. Kazakhstan's energy ministry denied reports that it was supplying AI-92 grade petrol to Russia, according to TASS. The denial is itself informative, because such reports circulate when Russian refining capacity is constrained. Ukrainian long-range strikes on Russian refineries have repeatedly cut processing runs this year, which can leave a major crude exporter short of finished fuel at home while continuing to sell crude abroad.

The two facts describe one structure. Russian crude finds buyers in Asia at a discount, while the refined products Russia needs domestically become the pressure point.