Tokyo, September 4 — Six months after the United States and Israel went to war with Iran, Asian economies are accelerating efforts to store oil and gas closer to home to reduce their exposure to Middle East conflict. The war, which began in late February, severely disrupted shipping through the Strait of Hormuz, a critical chokepoint for Gulf oil and gas, due to Iranian attacks and a US naval blockade.
Asian countries, heavily reliant on Gulf energy, suffered some of the worst economic fallout, prompting immediate fuel conservation measures such as price caps, alternate driving days, and work-from-home mandates for civil servants.
Regional Response
Japan, which holds one of the world’s largest strategic oil reserves and weathered the crisis relatively well, has taken a leading role in helping Southeast Asian economies procure oil and petroleum products. In April, Japanese Prime Minister Sanae Takaichi announced the $10 billion POWERR Asia initiative to support the region’s energy security. The crisis exposed vulnerabilities in the region’s energy reserves, with Vietnam holding only enough oil in national reserves for five to seven days, though commercial inventories extended supplies up to 65 days.
Thailand held about 61 days of reserves against a 25-day mandated minimum, while the Philippines had an estimated 50-60 days in private commercial inventories, all falling below the International Energy Agency’s 90-day benchmark.
Infrastructure Development
In response to the crisis, a Philippine parliamentary panel approved a bill last month to create a 60-day government-held reserve. Thai officials are advancing plans for cross-peninsula crude pipelines and tank farms to compete with Singapore for Gulf crude storage, according to Ben Kiatkwankul of Maverick Consulting Group.
India, which had about 74 days of oil stocks as of May, with over 90 percent held by state-owned enterprises, is also rethinking its strategic stockpile, with the state-owned Oil and Natural Gas Corporation announcing plans to build a reserve of 1.75 million metric tons in July. Parul Bakshi, a visiting research fellow at the Oxford Institute for Energy Studies, notes that governments have pursued more permanent solutions, investing in infrastructure to bypass geopolitical risk or eliminate dependence on imported fuel altogether.
This shift toward energy security through domestic and regional storage reflects a fundamental change in how Asian economies approach energy supply in an era of heightened geopolitical risk.
Looking Ahead
As the region continues to navigate the challenges posed by the war, it remains to be seen how effective these efforts will be in reducing dependence on Middle East oil and gas. The coming months will be crucial in determining the trajectory of Asian economies and their energy security.
