Business & Finance
Asian nations expand energy reserves and infrastructure following Strait of Hormuz disruption
Governments across Asia are boosting domestic oil storage, funding regional stockpiles, and pursuing supply deals to reduce exposure to Middle East transit risks.
The short version
- Severe shipping disruptions in the Strait of Hormuz have prompted Asian governments to accelerate investments in domestic energy stockpiles and regional infrastructure.
- Countries including Japan, India, Thailand, the Philippines, South Korea, and China are expanding reserves or partnering with Gulf producers to store crude closer to demand centers.
- Major Southeast Asian nations held reserves significantly below the International Energy Agency's 90-day benchmark when disruptions began.
- The primary focus moving forward is whether these multibillion-dollar pipeline and storage initiatives can be completed fast enough to insulate economies from ongoing geopolitical volatility.
Key facts
- Shipping through the Strait of Hormuz was severely restricted following the outbreak of conflict involving the United States, Israel, and Iran, sharply reducing oil and gas flows to Asia.[Al Jazeera]
- At the start of the conflict, Vietnam held five to seven days of oil in state reserves, Thailand held around 61 days across public and private sectors, and the Philippines had an estimated 50 to 60 days in commercial inventories, all under the IEA's 90-day benchmark.[Al Jazeera]
- Japan announced a $10 billion initiative named POWERR Asia in April to assist Southeast Asian countries with petroleum procurement and strategic stockpile development.[Al Jazeera]
- India's state-owned ONGC announced plans in July to construct a 1.75 million metric ton reserve in southern India, alongside broader expansions to existing stockpiles.[Al Jazeera]
- A Philippine legislative panel approved a measure establishing a 60-day state-held oil reserve, while Thai officials are advancing plans for cross-peninsula pipelines and storage facilities.[Al Jazeera]
- State pipeline operator PipeChina stated in May that it is accelerating work on roughly 40 oil and gas projects, encompassing 9,000 kilometers of domestic pipelines.[Al Jazeera]
What remains uncertain
- It remains unconfirmed whether South Korea will finalize reported proposals to expand its existing 146-million-barrel strategic reserve by an additional 30 to 40 million barrels.[Al Jazeera]
- Discussions regarding India storing portions of its strategic oil reserves outside the Strait of Hormuz at the UAE port of Fujairah remain under consideration without a finalized agreement.[Al Jazeera]