Asian economies are racing to build domestic oil and gas storage capacity to reduce their exposure to conflict in the Middle East, six months after the US-Israel war on Iran disrupted shipments through the Strait of Hormuz.
The crisis has forced countries across Asia to rethink decades of reliance on Gulf energy imports, with several nations pursuing ambitious infrastructure projects to keep critical supplies closer to home.
Japan has launched the $10 billion POWERR Asia initiative, aimed at helping Southeast Asian economies procure oil and build strategic stockpiles. Japanese Prime Minister Sanae Takaichi announced the program in April as part of a broader effort to help neighboring countries follow Japan’s lead in maintaining one of the world’s largest strategic oil reserves.
The United Arab Emirates and its Abu Dhabi National Oil Company (ADNOC) already store oil in Singapore, India, South Korea, and Japan. ADNOC is now aiming to raise its crude oil storage capacity in India to 30 million barrels, while New Delhi is considering a proposal to store some of its strategic reserves at the UAE port of Fujairah on the Gulf of Oman, beyond the Strait of Hormuz bottleneck.
Kuwait and Saudi Arabia also maintain stockpiles in South Korea and Japan, and there are ongoing discussions about expanding that capacity. South Korean media reported that Seoul is considering expanding its oil reserves of approximately 146 million barrels by an additional 30 to 40 million barrels.
Thailand is moving forward with plans for new cross-peninsula crude pipelines and tank farms, positioning the country as an alternative to Singapore for Gulf crude storage. The Philippines has seen a parliamentary panel approve a bill to create a 60-day government-held reserve.
‘The crisis is producing two very different kinds of investment: infrastructure that bypasses geopolitical risk, and infrastructure that eliminates exposure to imported fuel altogether,’ said Parul Bakshi, a visiting research fellow at the Oxford Institute for Energy Studies.
For Gulf suppliers, the push represents both a challenge and an opportunity. While the disruption has throttled exports, countries like the UAE are positioning Fujairah as a strategic storage hub beyond the Hormuz chokepoint, deepening economic ties with Asian partners.
The common thread across the region, Bakshi noted, is reducing exposure to a single fuel, supplier, or chokepoint. ‘It is no longer enough to ask where the next barrel comes from. We also have to ask how it gets there, how long we can operate without it, and whether we can reduce our need for that barrel altogether.’
