Asian economies are pursuing a longer-term energy-security response after the United States and Israel went to war with Iran six months ago, disrupting oil and gas shipments through the Strait of Hormuz. Governments are seeking more storage closer to home, alternative transport links and greater domestic energy capacity to reduce exposure to future conflict.
The disruption initially prompted fuel conservation measures across the region, including price caps, alternate driving days and work-from-home requirements for some civil servants. The latest efforts focus on limiting the effect of a prolonged interruption rather than relying only on emergency measures.
Japan’s model gains regional attention
Japan, which is highly dependent on Middle Eastern energy, has been less exposed than some other economies because it holds one of the world’s largest strategic oil reserves. In April, Prime Minister Sanae Takaichi announced the POWERR Asia initiative to help Southeast Asian economies procure oil and petroleum products and eventually build strategic stockpiles.
The crisis has renewed efforts in Bangkok and Manila to create comprehensive government-held reserves. A parliamentary panel in the Philippines approved a bill for a government-held reserve, while Thai officials are advancing plans for cross-peninsula crude pipelines and tank farms intended to strengthen the country’s position as a storage location for Gulf crude. For additional context, see “Oil prices reach one-month peak as US-Iran conflict disrupts Strait of Hormuz shipping”.
Key figures
- Japan’s POWERR Asia initiative is valued at $10bn.
- Vietnam’s national reserves covered five to seven days of demand at the outbreak of the war; commercial inventories and other sources extended available supplies for up to another 65 days.
- Thailand held about 61 days of reserves across public and private sectors against a mandated minimum of 25 days. The Philippines was estimated to have 50–60 days in private commercial inventories.
- India had about 74 days of oil stocks as of May, while South Korea was considering adding 30–40 million barrels to reserves of about 146 million barrels.
- India’s Oil and Natural Gas Corporation announced a 1.75-million-metric-tonne reserve, or 13 million barrels, and plans to expand existing stockpiles by 6.5 million metric tonnes.
Storage is moving beyond national borders
Japan, South Korea and Singapore have longstanding arrangements with Middle Eastern countries to locate oil supplies closer to their own shores, according to Clara Gillispie of the Council on Foreign Relations. She said there is interest in expanding existing capacity, signing new understandings and developing broader arrangements involving India.
The United Arab Emirates and Abu Dhabi National Oil Company already store oil in Singapore, India, South Korea and Japan. Kuwait and Saudi Arabia also have stockpiles in South Korea and Japan. ADNOC is seeking to increase its crude storage capacity in India, while New Delhi is considering storing some strategic reserves at Fujairah, a UAE port on the Gulf of Oman that lies beyond the Strait of Hormuz bottleneck. A related part of this story is covered in “Brent crude climbs as Strait of Hormuz deal remains uncertain”.
Pipelines and domestic capacity are part of the response
India’s stockpile plans form part of a wider effort to reduce reliance on a single shipping route. In China, the Hormuz blockage has reinforced the case for energy-security investment, according to Chinese energy policy expert David Fishman of the Lantau Group.
China’s five-year plan for oil and gas development from 2026 to 2030 includes more pipelines and expanded liquefied natural gas storage, alongside measures such as deeper-water drilling. State-owned pipeline operator PipeChina said in May that it was accelerating some of its oil and gas projects, including domestic pipeline construction covering 9,000 kilometres. The development of this issue can be followed in “How the Strait of Hormuz disruption lifted oil profits”.
Parul Bakshi of the Oxford Institute for Energy Studies said the region’s investments fall into two broad categories: infrastructure that bypasses geopolitical risks and infrastructure that reduces dependence on imported fuel altogether. She said the central concern is no longer only where the next barrel comes from, but also how it arrives and how long economies can operate without it.
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