Asia Bolsters Domestic Oil and Gas Reserves After Hormuz Crisis

Six months after the US and Israel clashed with Iran, Asia—a region heavily reliant on Gulf oil and gas transit via the Strait of Hormuz—continues to suffer severe economic impacts. Restricted shipping through the strait, due to Iranian attacks and a US naval blockade, sent energy prices soaring, forcing many regional nations to adopt emergency fuel-saving measures such as price caps, driving restrictions, or mandating remote work for public employees.

Since then, Asia has been seeking long-term solutions to the worst energy crisis in its history by keeping essential oil and gas supplies closer to home.

Parul Bakshi, a research fellow at the Oxford Institute for Energy Studies, noted: “The crisis is generating two very different types of investment: one that hedges against geopolitical risk, and another that eliminates dependence on imported fuels altogether.”

Japan Proposes Regional Initiative

One of the most ambitious proposals comes from Japan. Despite its heavy reliance on Middle Eastern energy, Japan weathered the crisis better than many other economies, thanks to one of the world’s largest strategic oil reserves. Tokyo now wants its Southeast Asian neighbors to follow suit.

In April, Japanese Prime Minister Sanae Takaichi unveiled the POWERR Asia initiative, a $10 billion program to help Southeast Asian economies purchase crude oil and petroleum products, as well as to build long-term strategic reserves.

Regional Stocks Below Safety Standards

According to state media, when the Iran war erupted in late February, Vietnam had only enough national oil reserves for 5–7 days, though commercial inventories and other sources could extend this by another 65 days. Thailand held about 61 days of reserves (public and private) against a 25-day regulatory minimum. The Philippines estimated 50–60 days in private commercial stocks. All fall below the International Energy Agency’s (IEA) 90-day minimum threshold.

In Bangkok and Manila, the war spurred the creation of government-held strategic oil reserves. Last month, a Philippine congressional committee approved a bill to establish a 60-day government stockpile. Meanwhile, Thai officials are advancing plans to build a trans-peninsular crude oil pipeline and storage facilities to compete with Singapore in Gulf crude storage, according to Ben Kiatkwankul of Maverick Consulting Group.

India and Major Economies Expand Reserves

India is also rethinking its strategic reserves. According to S&P Global, the country had about 74 days of oil stocks as of May, with over 90% held by state-owned enterprises. In July, India’s ONGC announced construction of a 1.75-million-metric-ton (about 13 million barrels) storage facility in the south, adding to plans for an additional 6.5 million tons.

Other major economies such as Japan, South Korea, and Singapore are seeking direct storage agreements with Gulf suppliers. Clara Gillispie, senior fellow for climate and energy at the U.S. Council on Foreign Relations (CFR), noted these countries have long-standing relationships with several Middle Eastern nations to position storage near their shores, and now there is interest in expanding existing capacity and signing new deals, including exchanges with India.

The UAE’s Abu Dhabi National Oil Company (ADNOC) already stores oil in Singapore, India, South Korea, and Japan. Kuwait and Saudi Arabia also have reserves in South Korea and Japan. ADNOC aims to raise crude storage capacity in India to 30 million barrels, while New Delhi is reviewing a proposal to store part of its strategic reserves at the UAE’s Fujairah port on the Gulf of Oman—outside the Hormuz chokepoint.

South Korean media report that Seoul is considering expanding its oil reserves (currently about 146 million barrels) by 30–40 million barrels, higher than the original plan of 20 million barrels.

China Boosts Energy Security Investment

In China—the world’s second-largest oil consumer—the Hormuz blockade reinforced the belief that the country must invest more heavily in energy security. The 15th Five-Year Plan (2026–2030) for oil and gas development includes provisions for oil pipelines, LNG storage expansion, and deep-sea drilling. State-owned pipeline operator PipeChina said in May it is accelerating construction of about 40 oil and gas projects, including 9,000 km of domestic pipelines.

David Fishman, a China energy policy expert at Hong Kong-based Lantau Group, argued that the Hormuz conflict was “not the direct cause” of these provisions appearing in the draft plan, but it “underscored to policymakers that this way of thinking is correct and the assumption of chronic instability is well-founded.” Any doubts about the cost or effort of building redundant national energy storage “have certainly evaporated.”

Bakshi of Oxford emphasized the region’s common goal is reducing exposure to “one fuel, one supplier, or one chokepoint.” “It is no longer enough to ask where the next barrel of oil comes from. We must also ask how it arrives, how long we can operate without it, and whether we can reduce our demand for that barrel,” she said.