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LONDON—Russia, the world's top oil producer, is set to make deep inroads into Asian energy markets at the expense of Mideast rivals thanks to a new pipeline that pumps crude from the oilfields of Siberia to a new terminal on the Pacific Ocean.

The pipeline, a pet project of prime minister Vladimir Putin, is key to Russia's efforts to diversify its export routes away from Europe and tap growing energy demand in Asia. It is also important to countries such as China that want to reduce their dependence on Middle East oil.

Mr. Putin inaugurated the first stage of the $12 billion East Siberia-Pacific Ocean pipeline, or ESPO, last month. The crude it carries, also referred to as ESPO, is already proving a hit with Asian customers. ESPO "will likely displace some similar quality Middle East crudes," the International Energy Agency said in its monthly oil market report Friday.

SPO heralds an "important step change in world crude markets," JP Morgan oil analyst Lawrence Eagles wrote in a research note Friday. "It provides Russia with the infrastructure necessary to act as a swing producer between Western and Eastern markets."

In recent years, as relations between Russia and Europe deteriorated, Russia has repeatedly threatened to divert its energy exports to Asia. But with nearly all its oil and gas pipelines flowing east to west, the threat has rung hollow. That is now changing.

"Europe will now have to compete with Asia for Russian crude," sa... >>>