woocommerce_order_status_changed not being called if status changed via API

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We have a third party tool that updates order statuses. We also have an action in our functions.php which uses woocommerce_order_status_changed.

When we change the status manually, the action is called. When the 3rd party tool updates the status via the API, the action is not called. Is this a known issue? Is there another way we should implement our action?