On May 11, Indonesian Energy Minister Bahlil Lahadalia told reporters in Jakarta that contracts for 150 million barrels of Russian crude had been signed and the first cargo was expected within two weeks. "The deal is done," he said. "The contract is done." Five days later, the U.S. Treasury's emergency authorization permitting buyers anywhere in the world to purchase sanctioned Russian oil technically lapsed.
The waiver, first issued on March 12 after the Strait of Hormuz crisis disrupted Gulf shipping and sent oil prices soaring, was intended as a temporary emergency measure to stabilize stressed energy markets. But even after Treasury Secretary Scott Bessent signaled on May 16 that Washington intended to tighten pressure on Moscow, the administration again reversed course, extending the authorization through May 16.
By then, the market had already begun reorganizing around the assumption that discounted Russian crude would remain available. Indonesia's decision to enter the Russian oil market at scale is the most significant and visible signal of that reorganization. It is one of at least four deals concluded with Asian buyers during the waiver period, bringing the confirmed aggregate committed volume to approximately 153.7 million barrels: Indonesia's 150 million barrels, the Philippines' 2.48 million barrels procured by Petron in late March, and two shipments of an estimated 600,000 barrels each for a total of 1.2 million delivered by a sanctioned Russian shadow tanker to two Japanese refineries under direction from Japan's Ministry of Economy, Trade and Industry (METI) in the first two weeks of May. Singapore and Hong Kong were separately confirmed as new buyer destinations by the Centre for Research on Energy and Clean Air (CREA) — almost certainly trading entities taking positions for re-export rather than refinery intake, and with no disclosed volumes.
Taken together, these deals represent the normalization of trade in sanctioned Russian crude beyond the original buyer pool of China and India. Indonesia had not openly purchased Russian oil at this scale before and had largely relied on shadow-fleet ship-to-ship transfers near Hong Kong to avoid blowback. Japan, meanwhile, had avoided Russian crude imports since June 2025 except for narrowly tailored sanctions exemptions tied to Sakhalin-2, the Far East energy project Tokyo considers strategically necessary for LNG supply security. All three countries did so during the same 65-day window, under the same authorization. Japan’s government is now reportedly sending an official delegation to Moscow to discuss, among other things, expanding that relationship further.
Tokyo–Washington’s closest Indo-Pacific ally–has said there has been no change in its cooperative stance on sanctions against Russia. But recent moves to organize government and business delegations to Moscow, including participation by some of Japan’s largest trading houses and at least one Japanese legislator, hint at growing unease inside parts of Japan’s business and political establishment over the long-term costs of economic disengagement. For a G7 coalition already divided over price caps, waivers, and maritime enforcement, that is not a trivial signal.
What began for Moscow as an emergency workaround after the G7 imposed an oil price cap on Russian oil in late 2022, and the adoption of sectoral sanctions on Russia’s energy, finance, and defense-industrial base, is evolving into a durable parallel trading system with its own logistics, brokers, financing channels, and political logic. Powered by a fleet of hundreds of aging tankers with dodgy paperwork and histories that link them to the sanctioned Iranian oil trade, the shadow economy that has grown up around Russian trade is now also consolidating a parallel energy-financial architecture built around shadow shipping, ruble-yuan settlement, offshore liquidity networks, and sanctions-adapted payment channels operating increasingly outside the Western financial system.
Figure 1-This chart shows the flows of Russian oil to Asia during the period when the Treasury waiver was in force from March 12 to May 16. During that 65-day stretch amid the Strait of Hormuz closure Russian tankers delivered an estimated 1.8 to 2.25 million barrels a day, roughly half that was borne by the shadow fleet. Sources: Kpler, Vortexa, US Treasury, WTO Hormuz Trade Tracker.
The Treasury authorization was a 65-day experiment in managed contradiction — designed as emergency triage after U.S. and Israeli strikes on Iran in late February closed the Strait of Hormuz, the narrow waterway through which roughly a fifth of the world's oil normally passes, and sent prices toward $120 a barrel. The idea was to let stranded Russian crude clear the market and wind down. What it produced instead was more durable: state-level supply commitments from major Asian economies that will endure despite sanctions, an accelerating reorganization of Russia's shadow shipping fleet under naval protection, and financial infrastructure that Washington was simultaneously trying to dismantle even as the Trump administration licensed its operations.
The expiration date for the extension came and went over the weekend without any official update from Treasury’s Office of Foreign Asset Control (OFAC). But after two successive reversals amid energy-market stress, traders and intermediaries increasingly appeared to view the waiver regime less as a temporary emergency measure than as a rolling feature of the market. On Monday, May 18, Bessent confirmed that assumption, announcing another 30 day extension for Russian oil sales that will expire in mid-June.
Whether Treasury blows through a third expiration date and extends again, may now well be beside the point. With Trump now reportedly considering reversing separate designations levied against Chinese teapot refineries in connection with sanctioned Iranian oil trade Washington is clearly wrestling with the loss of leverage in its employment of chokepoint statecraft. The fact is that the shadow fleet and the financial infrastructure the Kremlin has built to prop up its oil trade and fund its war in Ukraine are entrenching the bifurcation of the world energy market, at the risk of normalizing parallel settlement systems that reduce Western visibility into, and leverage over, the global energy trade.
A Stanford University research team estimated in a study released just days before the authorization expired that extending the waiver through December 2026 would generate an additional $36.1 billion in Russian oil revenues, equivalent to roughly 2 percent of Russia’s entire economy. The administration has not publicly addressed the estimate. But for buyers such as Indonesia, the market appears to have already moved on. Discounted Russian crude and the shadow infrastructure supporting it are increasingly being treated not as temporary wartime expedients, but as enduring features of global energy commerce.
That has serious implications for a negotiated settlement in Ukraine — and for any Western government still counting on sanctions pressure to shape Moscow's calculus at the table. Whether Washington extends the waiver or not, five things are now true that were not true on March 12. First, there are the earnings. While the surge in oil revenue has not reversed the downward trend of the Russian economy it will make it possible for the Kremlin to plug holes in its budget. Second, the shadow fleet is growing its customer base. The hurt for in Asia for oil poses an existential threat for some countries in the region, and it is fast eroding compliance with sanctions regimes. Third, the revival of the shadow trade is turbocharging Russia's digital payment settlement system, puffing up Vladimir Putin's dream of converting the ruble into a fulcrum against dollar dominance and enhancing Russia's share of the BRICS trade. The fourth is linked to the first three; the turn toward ruble-yuan trade obscures structural weaknesses in an economy aptly characterized by CSIS as crashing after a "sugar high" of increased defense-industrial spending and subsidies. That opacity is appears to be clouding the Kremlin's judgment about the country's capacity to absorb more economic pain as the war drags on. Lastly--and perhaps least appreciated in Washington--is that the shadow trade system is incentivizing greater cooperation between gray zone entrepreneurs who keep supply lines to Russia and Iran humming. That is a feature likely to endure and harden in the emerging new world order.
The argument against another extension is not about oil prices. It is about what the first two authorizations built while everyone was watching the price, and why each of those five things makes the next extension harder to justify on its own terms. All five trend-lines lead back to the same Russian financial house–Promsvyazbank, or PSB as its better known in Moscow, and its companion digital currency enterprise A7. A fuller breakdown of the first two trends--renewed earning power and a growing client list--follows with a detailed explanation of the others elaborated on in the second part of this analysis.
What Russia Earned
The windfall is real, but Ukraine’s steadily escalating campaign of attacks on Russian energy infrastructure have muted its effect on the Kremlin’s government budget. Russia's fossil fuel export revenues reached 734 million Euros per day in April 2026 — the highest level in two and a half years, according to CREA’s April monthly tracker. Urals crude was trading at $112.3 per barrel, more than double the $44.10 ceiling that the European Union and the United Kingdom had set to limit Russia's war revenues. The G7's original $60 ceiling, still nominally in force on the U.S. side, had become a figure nobody enforced.
Ukraine's drone campaign was the one mechanism that actually dented volumes. Repeated strikes on the Tuapse refinery — Russia's fifth-largest oil export installation — contributed to a 65 percent year-on-year drop in oil product export volumes between January and April, per CREA. Baltic port loading at Ust-Luga and Primorsk halved in late March after Ukrainian drone strikes hit both terminals. For a period, roughly 40 percent of Russia's oil export capacity was offline.
The Urals price premium offset most of the damage. Russia's Finance Ministry reported that oil and gas revenues fell 38.3 percent year-on-year through the first four months of 2026. Deputy Finance Minister Sergei Aleksashenko said that much of the windfall was consumed by a “war premium” of roughly $2.95 billion in subsidies to oil companies for domestic fuel price suppression, not the war budget directly. There are no precise estimates for the cost of repairs to damaged infrastructure and continued Ukrainian strikes on shadow fleet tankers, but the number could stretch will into the hundreds of millions, if not several billion. Complicating the picture further is the Rube Goldberg like system of subsidies and regional debt cancellations, the Kremlin has enacted since the start of the war to stabilize the economy.
That said, the oil revenue surge has coincided with a fundamental shift in how Russian crude is paid for. By January 2024 — the last point at which Russia's central bank published a breakdown — yuan accounted for 34.5 percent of Russian export settlements, up from less than one percent before the invasion, CBR Governor Nabiullina told RIA Novosti. A large part of the infrastructure now routing those payments is predominantly powered by PSB and its digital payments platform A7, and operates almost entirely outside the Western banking system.
Who Is Now Buying, Who Is Hedging
Buyers in the first weeks of the authorization produced were opportunistic. The Philippines, Singapore, and Hong Kong made emergency spot purchases — supply disrupted, gap filled, no long-term commitment entered. South Korea also joined the club with an emergency purchase of Russian naphtha. The second period, which ran from April 15 to May 16, produced something different.
Pertamina, Indonesia's state energy company, entered 2025 committed to buying Russian oil only at or below the $60 price ceiling. That position is gone. An April 13 Kremlin meeting between Indonesian President Prabowo Subianto and Russia’s President Vladimir Putin produced a supply deal running through the end of 2026, with Russia committing to build oil storage facilities in Indonesia and explore refinery development alongside it. Bahlil confirmed contracts were signed on May 11 but declined to disclose the pricing, the currency, or the banking channel. A separate Indonesian official said the same day that ministries were still discussing which import channels would be used. The contracts were signed. The transaction architecture was not settled.
Japan moved faster and more explicitly.The first Russian oil cargo to reach a Japanese refinery since June 2025 arrived on the Omani-flagged and sanctioned Voyager tanker at a Taiyo Oil facility in western Japan on May 4-5, sourced from Sakhalin-2, the Pacific offshore project in which Japanese companies hold equity stakes. Japanese authorities initiated a subsequent purchase that was routed to a second refinery.
Voyager’s registered owner, Marvel Marine, is linked to Dreamer Shipmanagement LLC-FZ, one of several Dubai free zone-registered shadow fleet intermediaries that shares an address at the Meydan Grandstand business center and links to Russia’s state shipping giant Sovcomflot. The tanker departed Prigorodnoye on March 1, 2026 — eleven days before the Treasury Department issued the waiver via General License 134. The vessel loaded before the waiver opened. By Day 5 it was already transiting the China Coast at 94 percent laden, according to AIS snapshots collected and analyzed by Frontline Atlas during the first stage of the waiver period. The draught held at 12.7m through Day 33, and the destination remained OPL Hong Kong across four consecutive snapshots, suggesting a lightering or STS transfer rather than a direct port call.
Figure 2- VOYAGER (IMO 9843560) — AIS Positional Record, GL 134 Waiver Window. Five weekly snapshots, March 16 – April 13, 2026. Vessel departed Prigorodnoye March 1, eleven days before GL 134 took effect. Draught remained at 12.7 m / 91% laden from Day 12 onward. Destination held at OPL Hong Kong across four consecutive snapshots, consistent with offshore lightering rather than direct port entry. Registered owner: White Agate Marine SPC (Oman). ISM manager: Albatross Shipmanagement, Meydan Grandstand, Dubai. Five sanctioning bodies: US OFAC, EU, UK FCDO, Canada, Switzerland. Enforcement gap classification: us_lag. Source: Frontline Atlas AIS Snapshot Series · Master Dataset 2026-04-13 · frontlineatlas.io.
There is no word on whether Japan was aware of the ship’s complex history. But METI officials are reportedly slated to travel to Moscow on May 26-27, but the diplomatic trip, which will include representatives from Mitsui and Mitsubishi, is ostensibly focused on the protection of Japanese assets in Ukraine and post-conflict economic cooperation.
Singapore and Hong Kong purchases of Russian oil during the waiver period appear to be mostly contingent ship-to-ship transfers, but the transactions have likely been settled in yuan. Both Indonesia and Japan have declined to explain how they intend to pay.
China’s appetite for Russian crude shows no signs of slowing. Nor does India’s. Officially, the government has signaled it will return to the status quo of buying oil at the price cap threshold assuming no extension is forthcoming. But its recent request to the Trump administration to extend the waiver for a third time suggests India is hedging and hoping for a different outcome. The stance has started to roil politics in New Delhi. India’s Congress opposition party leadership has slammed the ruling BJP party of President Narendra Modi for “begging” Washington for “permission” to import Russian oil and “handing over” India’s “energy sovereignty” to Washington.
Russia’s biggest buyers, China and India, have, meanwhile, been much more open about their high-volume oil transactions and their drive to settle trade with Russia outside the dollar system. Kpler data indicates that approximately 30 million barrels of Russian crude were destined for China in mid-March, with seaborne imports averaging 1.82 million barrels per dayin March and 1.92 million into April. Indian refiners imported nearly 60 million barrels of Russian crude during the initial waiver period. Following the Treasury extension, imports surged to a record high of 2.3 million barrels per day in the first half of May, a milestone recently celebrated by Russia’s foreign minister Sergei Lavrov.
Russia’s trade with its two largest Asian oil customers is now overwhelmingly moving outside the dollar system. The vast majority—estimated at over 90 percent—of the bilateral trade operations between India and Russia, predominantly driven by crude oil imports, is now settled outside the US dollar system. Putin said in December 2025 that national currencies accounted for 96 percent of Russia-India commercial settlements, while Russia’s finance minister said 99.1 percent of Russia-China settlements were conducted in rubles and yuan. Separately, Russia’s Energy Ministry documents reportedly put the yuan’s share of Russian oil and petroleum-product payments at 67 percent, with the dollar down to 5 percent, Izvestia reports. Russia-China trade dipped in 2025, but the payments architecture remained: ruble-yuan settlement had become the default, not the exception.
What those settlement figures do not show is the full architecture routing the payments — who built it, who controls it, and what else moves through it alongside Russian crude. Earlier this year, a Moscow company called A7-Agent posted part of the answer to its own website. Another part of the answer runs through balance sheets for PSB, the Russian state bank whose statutory mandate covers every defense contract in the country.
Behind those supply relationships, the financial and logistical infrastructure that made them possible kept operating throughout the 65-day window — and is still operating now. That infrastructure is the subject of a forthcoming Part 2.